UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2009
0-20159
(Commission File Number)
(Exact name of registrant as specified in its charter)
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Ohio
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31-1073048
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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323 Croghan Street, Fremont, Ohio
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43420
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(Address of principal executive offices)
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(Zip Code)
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(Registrants 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
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer, and smaller reporting company in Rule
12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
þ
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
o
No
þ
1,720,330 common shares, par value $12.50 per share, of the registrant were outstanding as of April
28, 2009.
This document contains 20 pages. The Exhibit Index is on page 17 immediately preceding the filed
exhibits.
CROGHAN BANCSHARES, INC.
Index
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CROGHAN BANCSHARES, INC.
Consolidated Balance Sheets (Unaudited)
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March 31
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December 31
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2009
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2008
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(Dollars in thousands, except par value)
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ASSETS
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CASH AND CASH EQUIVALENTS
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Cash and due from banks
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$
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10,259
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10,100
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Interest-bearing deposits due from banks
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7,782
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32
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Total cash and cash equivalents
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18,041
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10,132
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SECURITIES
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Available-for-sale, at fair value
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66,901
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68,748
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Held-to-maturity, at amortized cost, fair value of $523 in 2009 and $512 in 2008
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503
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504
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Restricted stock
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3,729
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3,729
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Total securities
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71,133
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72,981
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LOANS
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340,056
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349,433
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Less: Allowance for loan losses
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3,816
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3,287
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Net loans
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336,240
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346,146
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Premises and equipment, net
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7,023
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7,181
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Cash surrender value of life insurance
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10,695
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10,601
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Goodwill
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10,430
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10,430
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Core deposit intangible asset, net
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216
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230
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Accrued interest receivable
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1,850
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1,874
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Other assets
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1,278
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901
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TOTAL ASSETS
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$
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456,906
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$
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460,476
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LIABILITIES AND STOCKHOLDERS EQUITY
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LIABILITIES
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Deposits:
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Demand, non-interest bearing
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$
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47,483
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$
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49,820
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Savings, NOW, and Money Market deposits
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149,187
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143,922
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Time
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154,815
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151,335
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Total deposits
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351,485
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345,077
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Federal funds purchased and securities sold under repurchase agreements
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10,942
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17,351
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Federal Home Loan Bank borrowings
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35,500
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39,500
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Dividends payable
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551
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551
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Other liabilities
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3,094
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3,178
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Total liabilities
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401,572
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405,657
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STOCKHOLDERS EQUITY
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Common stock, $12.50 par value. Authorized 6,000,000 shares;
issued 1,914,109 shares
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23,926
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23,926
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Surplus
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179
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179
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Retained earnings
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37,601
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37,281
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Accumulated other comprehensive income
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679
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471
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Treasury stock, 193,779 shares in 2009 and 193,251 shares in 2008, at cost
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(7,051
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)
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(7,038
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)
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Total stockholders equity
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55,334
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54,819
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
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$
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456,906
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$
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460,476
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See notes to consolidated financial statements.
3
CROGHAN BANCSHARES, INC.
Consolidated Statements of Operations (Unaudited)
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Three months ended
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March 31
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2009
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2008
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(Dollars in thousands,
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except per share data)
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INTEREST INCOME
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Loans, including fees
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$
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5,196
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$
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5,876
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Securities:
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Obligations of U.S. Government agencies and corporations
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540
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382
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Obligations of states and political subdivisions
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217
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190
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Other
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56
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60
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Federal funds sold
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66
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Interest on deposits due from banks
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5
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57
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Total interest income
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6,014
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6,631
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INTEREST EXPENSE
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Deposits
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1,261
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2,006
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Other borrowings
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384
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342
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Total interest expense
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1,645
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2,348
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Net interest income
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4,369
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4,283
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PROVISION FOR LOAN LOSSES
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600
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650
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Net interest income, after provision for loan losses
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3,769
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3,633
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NON-INTEREST INCOME
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Gain on sale of loans
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56
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Trust income
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219
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210
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Service charges on deposit accounts
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364
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378
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Other
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214
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242
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Total non-interest income
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853
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830
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NON-INTEREST EXPENSES
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Salaries, wages, and employee benefits
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1,939
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1,836
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Occupancy of premises
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238
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234
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Amortization of core deposit intangible asset
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14
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14
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Other operating
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1,255
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1,275
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Total non-interest expenses
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3,446
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3,359
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Income before federal income taxes
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1,176
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1,104
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FEDERAL INCOME TAXES
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305
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292
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NET INCOME
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$
|
871
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$
|
812
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Net income per share, based on 1,720,659 shares in 2009 and 1,745,418 shares in 2008
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$
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0.51
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$
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0.47
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Dividends declared
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$
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0.32
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$
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0.32
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See notes to consolidated financial statements.
4
CROGHAN BANCSHARES, INC.
Condensed Consolidated Statements of Stockholders Equity (Unaudited)
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Three months ended
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March 31
|
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2009
|
|
|
2008
|
|
|
|
(Dollars in thousands,
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except per share data)
|
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|
|
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BALANCE AT BEGINNING OF PERIOD
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$
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54,819
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$
|
53,288
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Cumulative effect of change in accounting principle, net of tax
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(149
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)
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|
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|
Comprehensive Income:
|
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|
|
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Net income
|
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|
871
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|
812
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Change in net unrealized gain on securities available-for-sale,
net of reclassification adjustments and related income taxes
|
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|
208
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|
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|
440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total comprehensive income
|
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1,079
|
|
|
|
1,252
|
|
|
|
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Purchase of 528 treasury shares in 2009
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(13
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)
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|
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|
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Cash dividends declared, $.32 per share in 2009 and 2008
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(551
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)
|
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|
(559
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)
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BALANCE AT END OF PERIOD
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$
|
55,334
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$
|
53,832
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See notes to consolidated financial statements.
5
CROGHAN BANCSHARES, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
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Three months ended
|
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March 31
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
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|
NET CASH FLOW FROM OPERATING ACTIVITIES
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$
|
1,844
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$
|
1,657
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|
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|
|
|
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|
|
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CASH FLOWS FROM INVESTING ACTIVITIES
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Proceeds from maturities of securities
|
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|
6,298
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|
|
|
3,762
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|
Purchases of available-for-sale securities
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|
(4,168
|
)
|
|
|
(19,873
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)
|
Net decrease in loans
|
|
|
9,074
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|
|
|
6,830
|
|
Additions to premises and equipment
|
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|
(76
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)
|
|
|
(130
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from investing activities
|
|
|
11,128
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|
|
|
(9,411
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net change in deposits
|
|
|
6,408
|
|
|
|
(1,126
|
)
|
Net change in federal funds purchased and securities sold
under agreements to repurchase
|
|
|
(6,409
|
)
|
|
|
(1,372
|
)
|
Net change in borrowed funds
|
|
|
(4,000
|
)
|
|
|
|
|
Cash dividends paid
|
|
|
(551
|
)
|
|
|
(541
|
)
|
Purchase of treasury stock
|
|
|
(13
|
)
|
|
|
|
|
Payment of deferred compensation
|
|
|
(498
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from financing activities
|
|
|
(5,063
|
)
|
|
|
(3,050
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
|
|
7,909
|
|
|
|
(10,804
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
10,132
|
|
|
|
25,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
18,041
|
|
|
$
|
14,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW DISCLOSURES
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,788
|
|
|
$
|
2,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal income taxes
|
|
$
|
20
|
|
|
$
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing activity transfer of loans to other real estate owned
|
|
$
|
200
|
|
|
$
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
6
CROGHAN BANCSHARES, INC.
Notes to Consolidated Financial Statements
March 31, 2009
(Unaudited)
NOTE 1 Consolidated Financial Statements
The consolidated financial statements of Croghan Bancshares, Inc. (Croghan or the Corporation)
and its wholly-owned subsidiary, The Croghan Colonial Bank (the Bank), have been prepared without
audit. In the opinion of management, all adjustments (including normal recurring adjustments)
necessary to present fairly the Corporations consolidated financial position, results of
operations and changes in cash flows have been made.
Certain information and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted. The Corporations
Annual Report to shareholders for the year ended December 31, 2008, contains consolidated financial
statements and related footnote disclosures which should be read in conjunction with the
accompanying consolidated financial statements. The results of operations for the period ended
March 31, 2009 are not necessarily indicative of the operating results for the full year.
NOTE 2 New Accounting Pronouncements
During 2007, the Financial Accounting Standards Board (FASB) issued Emerging Issues Task Force
06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsed
Split-Dollar Life Insurance Arrangements (EITF 06-4), which requires an employer to recognize a
liability for postemployment death benefits provided under endorsement split-dollar agreements. An
endorsement split-dollar agreement is an arrangement whereby an employer owns a life insurance
policy that covers the life of an employee and, pursuant to a separate agreement, endorses a
portion of the policys death benefits to the insured employees beneficiary. EITF 06-4 clarifies
that such liability be provided over the estimated service period of the employee rather than over
the life expectancy of the employee. As a result of the adoption of EITF 06-4, effective January
1, 2008, the Bank recognized a cumulative effect adjustment (decrease) to retained earnings of
$149,000 in the first quarter of 2008 representing additional liability ($226,000) required to be
provided under EITF 06-4 relating to the Banks agreements, net of deferred income taxes ($77,000).
NOTE 3 Reclassifications
Certain reclassifications of 2008 amounts have been made to conform to the 2009 presentation in the
Consolidated Statements of Operations.
7
|
|
|
ITEM 2.
|
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Where appropriate, the following discussion relating to Croghan contains the insights of management
into known events and trends that have or may be expected to have a material effect on Croghans
operations and financial condition. The information presented may also contain certain
forward-looking statements regarding future financial performance, which are not historical facts
and which involve various risks and uncertainties. When used herein, the terms anticipates,
believes, plans, intends, expects, estimates, projects, targets, will, would,
should, could, and similar expressions are intended to identify forward- looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, but are not the
exclusive means of identifying such statements. The Corporations actual results may differ
materially from those expressed or implied in such forward-looking statements. Risks and
uncertainties that could cause or contribute to such material differences include, but are not
limited to, changes in regional and/or national economic conditions, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in the Corporations market
area, and competitive conditions in the financial services industry. Additional information
concerning a number of important factors which could cause actual results to differ materially from
the forward-looking statements is available in the Corporations filings with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the Exchange Act),
including the disclosure in
"
Item 1A. Risk Factors of Part I of Croghans Annual Report on Form
10-K for the fiscal year ended December 31, 2008.
The Corporation cautions readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Corporation does not undertake, and
specifically disclaims any obligation, to update any forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date of such statements, except to
the extent required by law.
PERFORMANCE SUMMARY
Assets at March 31, 2009 totaled $456,906,000 compared to $460,476,000 at December 31, 2008. Total
cash and cash equivalents increased $7,909,000 during the quarter ended March 31, 2009. Total
loans decreased to $340,056,000 from $349,433,000 at 2008 year end. Total securities decreased to
$71,133,000 from $72,981,000 at 2008 year end. Total deposits increased $6,408,000 to $351,485,000
from $345,077,000 at 2008 year end.
Net income for the three-month period ended March 31, 2009 was $871,000, or $.51 per common share,
compared to $812,000, or $.47 per common share for the same period in 2008, an increase of $59,000
or 7.3%. The March 31, 2009 results were positively affected by an $86,000 increase in net
interest income, a $23,000 increase in non-interest income, and a $50,000 decrease in the provision
for loan losses, offset by an $87,000 increase in non-interest expenses and a $13,000 increase in
federal income taxes.
FINANCIAL POSITION
The following comments are based upon a comparison of Croghans financial position at March 31,
2009 to December 31, 2008.
Total cash and cash equivalents increased $7,909,000 or 78.1% compared to December 31, 2008, due to
modest deposit growth and declining loan demand.
8
Total loans at March 31, 2009 decreased $9,377,000, or 2.7 percent compared to December 31, 2008.
The decrease in loans resulted from the general state of the economy, seasonal reductions from
certain commercial borrowers, and continued soft demand in the Banks lending markets.
Total securities decreased $1,848,000 or 2.5 percent during the first quarter of 2009. Purchases of
available-for-sale securities amounted to $4,168,000 and maturities amounted to $6,298,000. There
were no securities sales. Proceeds from maturities were principally used to purchase new
securities.
Total deposits increased $6,408,000 or 1.9 percent from year-end. The liquid deposit category
(demand, savings, NOW, and money market deposit accounts) increased $2,928,000 or 1.5 percent and
the time deposit category increased $3,480,000 or 2.3 percent. Croghan continuously strives to
maintain a balance between its deposit needs for funding anticipated loan demand and the necessary
deposit pricing structure to maintain interest margin.
Stockholders equity at March 31, 2009 increased to $55,334,000 or $32.16 book value per common
share compared to $54,819,000 or $31.86 book value per common share at December 31, 2008. The
balance in stockholders equity at March 31, 2009 included accumulated other comprehensive income
consisting of net unrealized gains on securities classified as available-for-sale, net of related
income taxes. At March 31, 2009, Croghan held $66,901,000 in available-for-sale securities with an
unrealized gain of $679,000, net of income taxes. This compares to 2008 year-end holdings of
$68,748,000 in available-for-sale securities with an unrealized gain of $471,000, net of income
taxes.
Beginning in February 2002, Croghan instituted a stock buy-back program, which has subsequently
been extended through August 1, 2009. Since the inception of the program, a total of 201,841
shares have been repurchased as treasury shares. The 193,779 treasury shares held as of March 31,
2009 and the 193,251 shares held as of December 31, 2008 are reported at their acquired cost.
A cash dividend of $.32 per share was declared on March 10, 2009, payable on April 30, 2009 to
shareholders of record as of April 10, 2009.
NET INTEREST INCOME
Net interest income, which represents the excess revenue generated from interest-earning assets
over the interest cost of funding those assets, increased $86,000 or 2.0 percent for the
three-month period ended March 31, 2009 as compared to the same period in 2008. The net interest
yield increased to 4.13 percent for the three-month period ended March 31, 2009 compared to 4.10
percent for the same period in 2008, and interest-earning assets increased $10,501,000, mostly in
the interest-bearing deposits due from banks.
PROVISION FOR LOAN LOSSES AND THE ALLOWANCE FOR LOAN LOSSES
Croghans comprehensive loan policy provides guidelines for managing credit risk and asset quality.
The policy details acceptable lending practices, establishes loan-grading classifications, and
stipulates the use of a loan review process. Croghan directly employs two staff members dedicated
to the credit analysis function to aid in facilitating the early identification of problem loans,
to help ensure sound credit decisions, and to assist in the determination of the allowance for loan
losses. Croghan also engages an outside credit review firm to supplement the credit analysis
function and to provide an independent assessment of the loan review process. Croghans loan
policy, loan review process, and credit analysis staff facilitate managements evaluation of the
credit risk inherent in the lending function.
9
The following table details factors relating to the provision and allowance for loan losses for the
periods noted:
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Three months ended
|
|
|
March 31, 2009
|
|
March 31, 2008
|
|
|
(Dollars in thousands)
|
|
Provision for loan losses charged to expense
|
|
$
|
600
|
|
|
$
|
650
|
|
Net loan charge-offs
|
|
|
71
|
|
|
|
947
|
|
Annualized net loan charge-offs as a percent
of average outstanding loans
|
|
|
.02
|
%
|
|
|
.28
|
%
|
The following table details factors relating to non-performing and potential problem loans as of
the dates noted:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009
|
|
December 31, 2008
|
|
|
(Dollars in thousands)
|
|
Nonaccrual loans
|
|
$
|
4,132
|
|
|
$
|
1,845
|
|
Loans contractually past due 90 days or more
and still accruing interest
|
|
|
390
|
|
|
|
334
|
|
Restructured loans
|
|
|
|
|
|
|
|
|
Potential problem loans, other than those past due
90 days or more, nonaccrual, or restructured
|
|
|
10,762
|
|
|
|
13,140
|
|
|
|
|
|
|
|
|
|
|
Total potential problem and non-performing loans
|
|
$
|
15,284
|
|
|
$
|
15,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
3,816
|
|
|
$
|
3,287
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a percent
of period-end loans
|
|
|
1.12
|
%
|
|
|
.94
|
%
|
During the first quarter of 2009, the Bank recognized a $600,000 provision for loan losses as
compared to a $650,000 provision during the same period a year ago. The 2009 provision primarily
is due to specific reserves provided for a commercial customer identified as an impaired loan
during the first quarter of 2009 due to cash flow issues. Loans to this customer were placed on
nonaccrual of interest during the quarter and account for most of the $2,287,000 increase in
nonaccrual loans at March 31, 2009 as compared to December 31, 2008. The first quarter 2009
provision was also attributable to an increase in the loss rates used to calculate the allowance
for loan losses. The first quarter 2008 provision was due to a $900,000 charge-off relating to a
commercial customer. Net loan charge-offs decreased to $71,000 for the first three months of 2009
compared to $947,000 during the same period in 2008.
Total potential problem and non-performing loans, which are summarized in the preceding table,
decreased $35,000 or .2% to $15,284,000 at March 31, 2009, compared to $15,319,000 at December 31,
2008. Favorable components at March 31, 2009, as compared to December 31, 2008, included a
$2,378,000 decrease in potential problem loans, other than those past due 90 days or more,
nonaccrual, or restructured, as these loans migrated into the nonaccrual loans category.
Unfavorable components included a $56,000 increase in loans contractually past due more than 90
days and still accruing interest and the aforementioned $2,287,000 increase in nonaccrual loans.
As illustrated in the following table, $8,524,000 or 79.2 percent of total potential problem loans
are less than 30 days past due and $10,749,000 or 99.9 percent are secured with collateral.
10
Croghan typically classifies credits as potential problem loans, regardless of collateralization or
the existence of contractually obligated guarantors, when a review of the borrowers financial
statements indicates that the borrowing entity does not generate sufficient operating cash flow to
adequately service its debts. All of the potential problem loans at March 31, 2009, totaling
$10,762,000, are currently performing loans (less than 90 days past due) and a majority are
collateralized by an interest in real property.
The following table provides additional detail pertaining to the past due status of Croghans
potential problem loans as of the dates noted:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Potential problem loans not currently past due
|
|
$
|
4,532
|
|
|
$
|
10,139
|
|
Potential problem loans past due one day or more but less than 10 days
|
|
|
157
|
|
|
|
2,193
|
|
Potential problem loans past due 10 days or more but less than 30 days
|
|
|
3,835
|
|
|
|
487
|
|
Potential problem loans past due 30 days or more but less than 60 days
|
|
|
2,206
|
|
|
|
224
|
|
Potential problem loans past due 60 days or more but less than 90 days
|
|
|
32
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
Total potential problem loans
|
|
$
|
10,762
|
|
|
$
|
13,140
|
|
|
|
|
|
|
|
|
|
Despite the overall decrease in potential problem loans during the quarter, the aggregate amount of
potential problem loans past due 10 days or more but less than 30 days and past due 30 days or more
but less than 60 days increased $5,330,000. These increases are a result of several large
commercial clients becoming past due on their contractual loan obligations.
The following table provides additional detail pertaining to the collateralization of Croghans
potential problem loans as of the dates noted:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Collateralized by an interest in real property
|
|
$
|
10,529
|
|
|
$
|
12,381
|
|
Collateralized by an interest in assets other than real property
|
|
|
220
|
|
|
|
747
|
|
Unsecured
|
|
|
13
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Total potential problem loans
|
|
$
|
10,762
|
|
|
$
|
13,140
|
|
|
|
|
|
|
|
|
|
The aforementioned asset quality trends will continue to be monitored throughout 2009, especially
the increase in past due loans within the potential problem loan category, to ensure potential
credit losses are identified and provided for in a timely manner through the provision for loan
losses. It is Croghans policy to maintain the allowance for loan losses at a level sufficient to
provide for losses inherent in the portfolio. Management considers the allowance at March 31, 2009
to be adequate to provide for those losses identified as well as those losses inherent within the
loan portfolio.
11
NON-INTEREST INCOME
Total non-interest income increased $23,000 or 2.8 percent for the three-month period ended March
31, 2009, compared to the same period in 2008. During the first quarter of 2009, the Bank
commenced selling fixed rate residential mortgage loans resulting in gains on sale of loans of
$56,000 during the quarter. Within the non-interest income category, this increase, as well as a
$9,000 increase in trust income, was partially offset by a decrease in deposit account service
charges.
NON-INTEREST EXPENSES
Total non-interest expenses increased $87,000 or 2.6 percent for the three-month period ended March
31, 2009, as compared to the same period in 2008. Salaries, wages and employee benefits increased
$103,000 or 5.6 percent between comparable three-month periods primarily due to increased health
insurance costs. Occupancy of premises expense increased $4,000 or 1.7 percent between comparable
three-month periods. Other operating expenses decreased $20,000 or 1.6 percent between comparable
three-month periods.
Croghans FDIC insurance expense was mitigated during the first quarters of 2009 and 2008 due to
available premium credits. Croghan will exhaust its remaining credits during the second quarter of
2009 and the FDIC has announced significant rate increases for the regular insurance assessment.
In addition, the FDIC originally announced a one-time special assessment of 20 basis points which
would be due September 30, 2009. While the FDIC has since announced that it will likely cut or
possibly even eliminate the special assessment, management nevertheless expects that Croghans FDIC
insurance expense will be significantly higher than the levels experienced during the first quarter
of 2009. Future increases may also be assessed which could have a further negative impact on
Croghans net income.
FEDERAL INCOME TAX EXPENSE
Federal income tax expense increased $13,000 or 4.5 percent between comparable three-month periods
which is in relation to the increase in income before federal income taxes of 6.5 percent. The
Corporations effective tax rate for the three months ended March 31, 2009 was 25.9 percent
compared to 26.4 percent for the same period in 2008.
LIQUIDITY AND CAPITAL RESOURCES
Short-term borrowings of federal funds purchased and repurchase agreements averaged $13,482,000 for
the three-month period ended March 31, 2009. This compares to $12,952,000 for the three-month
period ended March 31, 2008 and $11,294,000 for the twelve-month period ended December 31, 2008.
Borrowings from the Federal Home Loan Bank totaled $35,500,000 at March 31, 2009 compared to
$24,500,000 at March 31, 2008 and $39,500,000 at December 31, 2008.
Capital expenditures for premises and equipment totaled $76,000 for the three-month period ended
March 31, 2009, compared to $130,000 for the same period in 2008. The 2009 expenditures included
new personal computers and scanning equipment.
Loan commitments, including letters of credit, as of March 31, 2009 totaled $81,900,000 compared to
$74,079,000 at December 31, 2008. Since many of these commitments are expected to expire without
being drawn upon, this total does not necessarily represent future cash requirements.
12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the quantitative and qualitative information about market
risk from the information provided in Croghans Annual Report on Form 10-K for the fiscal year
ended December 31, 2008 (the 2008 Form 10-K).
ITEM 4T. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
With the participation of the Corporations principal executive officer and principal financial
officer, the Corporations management has evaluated the effectiveness of the Corporations
disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the
Corporations principal executive officer and principal financial officer have concluded that:
(a)
|
|
information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q
and the other reports which the Corporation files or submits under the Exchange Act would be
accumulated and communicated to the Corporations management, including its principal executive
officer and principal financial officer, as appropriate, to allow timely decisions regarding
required disclosure;
|
|
(b)
|
|
information required to be disclosed by the Corporation in this Quarterly Report on Form 10-Q
and the other reports which the Corporation files or submits under the Exchange Act would be
recorded, processed, summarized and reported within the time periods specified in the SECs rules
and forms; and
|
|
(c)
|
|
the Corporations disclosure controls and procedures were effective as of the end of the period
covered by this Quarterly Report on Form 10-Q.
|
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in the Corporations internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) that occurred during the Corporations fiscal quarter ended
March 31, 2009, that have materially affected, or are reasonably likely to materially affect, the
Corporations internal control over financial reporting.
13
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any pending legal proceedings, except for an ongoing shareholder dispute
regarding the inspection of the books and records of account of the Corporation and its subsidiary
Bank and routine legal proceedings to which the Corporations subsidiary Bank is a party incidental
to its banking business. Management considers none of those proceedings to be material.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should
carefully consider the risk factors discussed in Item 1A. Risk Factors of Part I of the 2008 Form
10-K, which could materially affect our business, financial condition, and/or operating results.
There have been no material changes to the risk factors discussed in Item 1A. Risk Factors of
Part I of the 2008 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)
|
|
Not applicable
|
|
(b)
|
|
Not applicable
|
|
(c)
|
|
The table below includes certain information regarding Croghans repurchase of its common
shares during the quarterly period ended March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
Maximum Number
|
|
|
|
|
|
|
Shares Purchased
|
|
of Shares that May
|
|
|
Total Number
|
|
Average
|
|
as Part of Publicly
|
|
Yet Be Purchased
|
|
|
of Shares
|
|
Price Paid
|
|
Announced Plans
|
|
Under the Plans
|
Period
|
|
Purchased
|
|
per Share
|
|
or Programs
|
|
or Programs (1)
|
|
|
|
|
|
|
|
|
|
01/01/09
through
01/31/09
|
|
None
|
|
None
|
|
None
|
|
77,807
|
|
|
|
|
|
|
|
|
|
02/01/09
through
02/28/09
|
|
528
|
|
$25.00
|
|
528
|
|
85,515
|
|
|
|
|
|
|
|
|
|
03/01/09
through
03/31/09
|
|
None
|
|
None
|
|
None
|
|
85,515
|
(1)
|
|
An extension of Croghans stock repurchase program was approved on July 15, 2008, in which up
to 86,476 shares could be repurchased from August 1, 2008 to February 1, 2009 (with a total of
8,669 shares being repurchased prior to its expiration). An extension of Croghans stock
repurchase program commencing February 1, 2009 and ending August 1, 2009 was announced on January
30, 2009, in which up to 86,043 shares may be repurchased (with 528 shares purchased on February
26, 2009).
|
14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
EXHIBIT 31.1 Rule 13a-14(a)/15d-14(a) Certification Principal Executive Officer
EXHIBIT 31.2 Rule 13a-14(a)/15d-14(a) Certification Principal Financial Officer
EXHIBIT 32 Section 1350 Certification Principal Executive Officer and Principal Financial Officer
15
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.
|
|
|
|
|
|
CROGHAN BANCSHARES, INC.
Registrant
|
|
Date: April 28, 2009
|
By:
|
/s/ Steven C. Futrell
|
|
|
|
Steven C. Futrell, President and CEO
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: April 28, 2009
|
By:
|
/s/ Kendall W. Rieman
|
|
|
|
Kendall W. Rieman, Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
16
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
Exhibit Location
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a)
Certification Principal Executive
Officer
|
|
Filed herewith
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a)
Certification Principal Financial
Officer
|
|
Filed herewith
|
|
|
|
|
|
|
|
|
32
|
|
|
Section 1350 Certification -
Principal Executive Officer and
Principal Financial Officer
|
|
Filed herewith
|
17
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