UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| 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
NB&T FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
| Ohio | 31-1004998 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
48 N. South Street, Wilmington, Ohio 45177
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number: (513) 382-1441
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 Act) Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: As of April 30, 2004, 3,223,483 common shares were issued and outstanding.
March 31, 2004 FORM 10-Q
Table of Contents
| Page | ||||
| PART I | ||||
| Item 1: |
3 | |||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 11 | ||||
| Item 2: |
Management’s Discussion and Analysis of Financial |
12 | ||
| Item 3: |
17 | |||
| Item 4: |
17 | |||
| Part II | ||||
| Item 1: |
18 | |||
| Item 2: |
18 | |||
| Item 3: |
18 | |||
| Item 4: |
18 | |||
| Item 5: |
18 | |||
| Item 6: |
18 | |||
| 19 | ||||
2
PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements:
Condensed Consolidated Balance Sheets
| (Dollars in thousands) |
March 31, 2004 |
December 31, 2003 |
||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
| Cash and due from banks |
$ | 16,232 | $ | 19,789 | ||||
| Interest-bearing demand deposits |
482 | 65 | ||||||
| Federal funds sold |
6,926 | 2,364 | ||||||
| Cash and cash equivalents |
23,640 | 22,218 | ||||||
| Securities - available-for-sale |
155,811 | 153,121 | ||||||
| Securities - held-to-maturity |
38,176 | 38,681 | ||||||
| Loans held for sale |
86 | |||||||
| Loans, net of allowance for loan losses of $ 4,740 and $4,830 |
409,031 | 404,905 | ||||||
| Premises and equipment |
13,945 | 14,057 | ||||||
| Federal Reserve and Federal Home Loan Bank stock |
7,948 | 7,877 | ||||||
| Goodwill and other intangibles |
6,878 | 7,039 | ||||||
| Interest receivable and other assets |
17,375 | 16,944 | ||||||
| Total assets |
$ | 672,804 | $ | 664,928 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Liabilities |
||||||||
| Deposits |
||||||||
| Demand |
$ | 56,124 | $ | 56,781 | ||||
| Savings, NOW and Money Market |
223,847 | 217,297 | ||||||
| Time |
175,347 | 176,422 | ||||||
| Total deposits |
455,318 | 450,500 | ||||||
| Short-term borrowings |
24,525 | 21,909 | ||||||
| Long-term debt |
131,671 | 132,519 | ||||||
| Interest payable and other liabilities |
3,308 | 3,304 | ||||||
| Total liabilities |
614,822 | 608,232 | ||||||
| Commitments and Contingencies |
||||||||
| Stockholders’ Equity |
||||||||
| Preferred stock, no par value, authorized 100,000 shares; none issued |
||||||||
| Common stock, no par value; authorized 6,000,000 shares; issued – 3,818,950 shares |
1,000 | 1,000 | ||||||
| Additional paid-in capital |
9,736 | 9,692 | ||||||
| Retained earnings |
53,518 | 52,883 | ||||||
| Unearned employee stock ownership plan (ESOP) shares |
(1,463 | ) | (1,506 | ) | ||||
| Accumulated other comprehensive income |
1,029 | 477 | ||||||
| Treasury stock; 595,467 and 596,667 shares at cost in 2004 and 2003 |
(5,838 | ) | (5,850 | ) | ||||
| Total stockholders’ equity |
57,982 | 56,696 | ||||||
| Total liabilities and stockholders’ equity |
$ | 672,804 | $ | 664,928 | ||||
See Notes to Condensed Consolidated Financial Statements
3
Condensed Consolidated Statements of Income
| Three Months Ended March 31, | ||||||
| (Dollars in thousands, except per share amounts) |
2004 |
2003 | ||||
| (Unaudited) | ||||||
| Interest and Dividend Income |
||||||
| Loans |
$ | 6,258 | $ | 6,807 | ||
| Securities-taxable |
1,155 | 1,701 | ||||
| Securities-tax-exempt |
595 | 667 | ||||
| Federal funds sold and other |
29 | 32 | ||||
| Dividends on Federal Home Loan and Federal Reserve Bank stock |
83 | 78 | ||||
| Total interest and dividend income |
8,120 | 9,285 | ||||
| Interest Expense |
||||||
| Deposits |
1,343 | 2,068 | ||||
| Short-term borrowings |
48 | 53 | ||||
| Long-term debt |
1,556 | 1,526 | ||||
| Total interest expense |
2,947 | 3,647 | ||||
| Net Interest Income |
5,173 | 5,638 | ||||
| Provision for Loan Losses |
450 | 540 | ||||
| Net Interest Income After Provision for Loan Losses |
4,723 | 5,098 | ||||
| Non-interest Income |
||||||
| Trust income |
253 | 194 | ||||
| Service charges and fees |
800 | 767 | ||||
| ATM network fees |
81 | 113 | ||||
| Insurance agency commissions |
664 | 651 | ||||
| Net gains on sales of securities available-for-sale |
527 | 546 | ||||
| Other |
294 | 338 | ||||
| Total non-interest income |
2,619 | 2,609 | ||||
| Non-interest Expense |
||||||
| Salaries and employee benefits |
2,847 | 3,056 | ||||
| Net occupancy expense |
340 | 346 | ||||
| Equipment and data processing expense |
723 | 705 | ||||
| Professional fees |
349 | 363 | ||||
| Marketing expense |
121 | 159 | ||||
| State franchise tax |
195 | 178 | ||||
| Amortization of intangibles |
160 | 174 | ||||
| Other |
857 | 740 | ||||
| Total non-interest expense |
5,592 | 5,721 | ||||
| Income Before Income Tax |
1,750 | 1,986 | ||||
| Provision for Income Taxes |
329 | 349 | ||||
| Net Income |
$ | 1,421 | $ | 1,637 | ||
| Basic Earnings Per Share |
$ | .45 | $ | .52 | ||
| Diluted Earnings Per Share |
$ | .45 | $ | .52 | ||
| Dividends Declared Per Share |
$ | .25 | $ | .24 | ||
See Notes to Condensed Consolidated Financial Statements
4
Condensed Consolidated Statements of Cash Flows
| Three Months Ended March 31, |
||||||||
| (Dollars in thousands) |
2004 |
2003 |
||||||
| (Unaudited) | ||||||||
| Operating Activities |
||||||||
| Net income |
$ | 1,421 | $ | 1,637 | ||||
| Items not requiring (providing) cash |
||||||||
| Depreciation and amortization |
646 | 611 | ||||||
| Provision for loan losses |
450 | 540 | ||||||
| Amortization of premiums and discounts on securities |
306 | 395 | ||||||
| Net realized (gains) losses on available-for-sale securities |
(527 | ) | (546 | ) | ||||
| FHLB stock dividends |
(71 | ) | (67 | ) | ||||
| Net change in: |
||||||||
| Loans held for sale |
86 | -0- | ||||||
| Other assets and liabilities |
(45 | ) | (332 | ) | ||||
| Net cash provided by (used in) operating activities |
2,266 | 2,238 | ||||||
| Investing Activities |
||||||||
| Purchases of available-for-sale securities |
(24,009 | ) | (92,104 | ) | ||||
| Proceeds from sales of available-for-sale securities |
6,814 | 18,921 | ||||||
| Proceeds from maturities of available-for-sale securities |
15,548 | 38,314 | ||||||
| Proceeds from maturities of held-to-maturity securities |
519 | 3,169 | ||||||
| Net change in loans |
(4,576 | ) | (8,121 | ) | ||||
| Purchase of premises and equipment |
(726 | ) | (375 | ) | ||||
| Proceeds from sales of premises and equipment |
0 | 56 | ||||||
| Net cash (used in) investing activities |
(6,430 | ) | (40,140 | ) | ||||
| Financing Activities |
||||||||
| Net change in: |
||||||||
| Deposits |
4,818 | 18,851 | ||||||
| Short-term borrowings |
2,616 | 2,405 | ||||||
| Proceeds from FHLB advances |
0 | 20,000 | ||||||
| Repayment of FHLB advances |
(1,096 | ) | (589 | ) | ||||
| Cash dividends |
(786 | ) | (778 | ) | ||||
| Proceeds from exercise of stock options |
34 | 282 | ||||||
| Net cash provided by financing activities |
5,586 | 40,171 | ||||||
| Increase in Cash and Cash Equivalents |
1,422 | 2,269 | ||||||
| Cash and Cash Equivalents, Beginning of Year |
22,218 | 25,810 | ||||||
| Cash and Cash Equivalents, End of Period |
$ | 23,640 | $ | 28,079 | ||||
See Notes to Condensed Consolidated Financial Statements
5
Notes to Condensed Consolidated Financial Statements
March 31, 2004
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q. The Form 10-Q does not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Only material changes in financial condition and results of operations are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The condensed consolidated balance sheet as of December 31, 2003 has been derived from the audited consolidated balance sheet of that date.
In the opinion of management, the condensed consolidated financial statements contain all adjustments necessary to present fairly the financial condition of NB&T Financial Group, Inc. (“the Company”) as of March 31, 2004, and December 31, 2003, and the results of its operations and cash flows for the three months ended March 31, 2004 and 2003. The results of operations for the interim periods reported herein are not necessarily indicative of results of operation to be expected for the entire year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements, accounting policies and financial notes thereto included in the Company’s Annual Report and Form 10-K for the year ended December 31, 2003 filed with the Commission.
Stock Options
The Company accounts for its stock option plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income and earnings per share if the company had applied the fair value provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation (thousands, except per share amounts):
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Net income, as reported |
$ | 1,421 | $ | 1,637 | ||||