Second Bancorp Incorporated 8-K
TABLE OF CONTENTS

Consolidated Statements of Income
Consolidated Average Balance Sheets
Consolidated Balance Sheets
Financial Highlights
Consolidated Statements of Income
Consolidated Average Balance Sheets
SIGNATURES

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: July 25, 2001

Second Bancorp Incorporated
(Exact name of registrant as specified in its charter)

         
Ohio 0-15624 34-1547453
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
     
108 Main Avenue S.W., Warren, Ohio 44482-1311
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 330-841-0123

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Item 5. Other Events

On July 19, 2001, the Company issued the following press release:

SECOND BANCORP
REPORTS STRONG SECOND QUARTER

Warren, Ohio, July 19, 2001—SECOND BANCORP INCORPORATED (Nasdaq “SECD”) reported second quarter 2001 net income of $4,258,000, up 14.7% from the $3,713,000 earned during the same period last year. Year-to-date earnings were $8.45 million, an increase of 10.4% over net income reported for the first six months of 2000. Diluted earnings for the quarter were $.42 per share, 16.7% higher than the $.36 reported last year and, for the first half of the year, were $.84 per share or 13.5% higher than the $.74 reported a year ago.

The Company’s key ratios for the second quarter and first half of 2001 were similarly improved over the same periods last year. Return on average assets (ROA) for both the quarter and year-to-date were 1.08% (compared to .93% and .97% respectively last year) and return on average equity (ROE) was 13.98% for the quarter and 14.03% for the first six months of 2001 (compared to 13.01% and 13.36% respectively last year). The Company’s efficiency ratio for the quarter also showed dramatic improvement falling to 56.00% from 63.48% a year ago as a combined result of fee income growth and effective cost controls. Second Bancorp’s net interest margin, though minimally higher quarter-to-quarter, was substantially unchanged from year-ago levels at 3.47%.

Second Bancorp President and Chief Executive Officer R. L. (Rick) Blossom indicated “Our strong earnings performance this year is, we believe, particularly noteworthy because it has been achieved during a period when net interest margins continue to be squeezed. Though our lending function will certainly continue to be our primary revenue business for the foreseeable future, we are aggressively pursuing fee income opportunities as we diversify our earnings stream and reduce our reliance on interest rate spreads. That is key to consistent, long-term improvement in our earnings.”

Non-interest income (excluding security and trading activity) for the quarter was $4.63 million, 26.2% ahead of results for the same period last year and $8.60 million for the first half of 2001, 13.5% better than the $7.58 million reported for the first two quarters last year. Income categories particularly strong during the second quarter and year-to-date were deposit service charges which were 18% and 19% ahead of results for the same periods last year and gains on sale of loans which were $1.11 million for the quarter compared to $309,000 a year ago. The 258% increase in gains on loan sales reflected strong real estate loan refinancing activity and the Company’s planned shift toward more aggressive use of the secondary mortgage markets as the Company manages its balance sheet.

Cost controls also continued to make significant contributions to Second Bancorp’s improving profitability with the second quarter of 2001 representing the third consecutive reporting period during which the Company recorded a net reduction in operating costs over the prior year. Non-interest expenses for the quarter were $9.805 million, a full 6% below the $10.431 million reported for the same period last year. Virtually every non-interest expense categories contributed to the drop in operating costs with salaries, professional services and other operating expenses leading the way. The Company’s success in managing to a strictly controlled expense budget has been demonstrated by its dramatically improved net overhead ratio which measures the Company’s net non-interest operating costs as a percentage of earning assets. Excluding the impact of the Company’s major balance sheet restructuring during last year’s third quarter, the Company’s net overhead ratio has steadily fallen to 1.39% for the current quarter from 1.91% a year ago.

Credit quality remains a focal point for Second Bancorp with the national and local economies continuing to demonstrate some weakness. Quarter-end “non-accrual loans” and “90-days past due but accruing loans” were, in the aggregate, 11.9% higher than at the end of the prior quarter. Net charge-offs for the second quarter were $1,511,000 or an annualized 0.56% of average loans and were .32% for the year-to-date. The Company’s loan loss reserve was steady at a solid 1.45% of period-end loans.

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The Company also reported that its Board of Directors declared a seventeen cent ($.17) per share common dividend payable July 31, 2001 to shareholders of record on July 13. That dividend is unchanged from the first quarter of this year and is 6.25% higher than the dividend paid for the second quarter last year.

Second Bancorp also noted that its stock was added to the broad market Russell 3000 and the small cap Russell 2000 Indexes at the end of June. Those indexes reflect general market trends by tracking the performance of the largest publicly traded companies in the United States as determined by market capitalization. Second Bancorp’s market capitalization exceeded $225 million at the end of the quarter.

This announcement contains forward-looking statements that involve risk and uncertainties, including changes in general economic and financial market conditions and the Company’s ability to execute its business plans. Although management believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially.

Second Bancorp is a $1.6 billion financial holding company providing a full range of commercial and consumer banking, trust, insurance and investment products and services to communities in a nine county area of Northeastern and East-Central Ohio through subsidiary Second National Bank’s network of 34 retail banking centers.

Additional information about Second Bancorp and information about products and services offered by Second National Bank can be found on the World Wide Web at www.secondnationalbank.com.

CONTACT: Christopher Stanitz, Executive Vice President and Secretary, at 330.841.0234 (phone), 330.841.0489 (fax), or cstanitz@secondnationalbank.com.

# # # # #

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Second Bancorp Incorporated and Subsidiary
Financial Highlights
Quarterly Data
(Dollars in thousands, except per share data)

                                           
June 2001 March 2001 Dec. 2000 Sept. 2000 June 2000
Earnings:
Net interest income $ 12,298 $ 11,916 $ 12,708 $ 11,606 $ 12,645
Provision for loan losses 1,342 761 903 4,843 696
Non-interest income 4,630 3,972 3,776 (28 ) 3,671
Security (losses) gains (12 ) 529 98 (2,802 ) 206
Trading account 13 58 10 (28 ) (431 )
Non-interest expense 9,805 10,051 10,345 13,140 10,431
Federal income taxes 1,524 1,475 1,314 (3,690 ) 1,251
Income before accounting change 4,258 4,188 4,030 (5,545 ) 3,713
Cumulative effect of accounting change, net of tax 0 (101 ) 0 0 0
Net income $ 4,258 $ 4,087 $ 4,030 ($5,545 ) $ 3,713
Per share:
Basic earnings before accounting change $ 0.42 $ 0.42 $ 0.40 ($0.55 ) $ 0.36
Basic earnings 0.42 0.41 0.40 (0.55 ) 0.36
Diluted earnings before accounting change 0.42 0.42 0.40 (0.55 ) 0.36
Diluted earnings 0.42 0.41 0.40 (0.55 ) 0.36
Common dividends 0.17 0.17 0.16 0.16 0.16
Book value 12.29 12.20 11.65 11.05 11.31
Tangible book value 12.15 12.04 11.49 10.88 11.12
Market value 22.90 17.50 14.50 14.13 15.19
Weighted average shares outstanding:
Basic 10,007,904 10,020,097 10,050,177 10,161,386 10,318,828
Diluted 10,103,060 10,046,562 10,069,215 10,161,386 10,340,082
Period end balance sheet:
Assets $ 1,578,370 $ 1,571,831 $ 1,546,290 $ 1,561,617 $ 1,632,913
Securities 380,262 377,323 382,098 400,176 370,250
Total loans 1,075,039 1,076,284 1,070,089 1,059,530 1,157,123
Reserve for loan losses 15,609 15,778 15,217 15,040 11,378
Deposits 1,059,758 1,061,556 1,036,135 1,084,377 1,105,449
Total shareholders’ equity 123,107 121,968 117,197 112,019 115,368
Tier I capital 119,857 117,497 115,315 114,158 122,595
Tier I ratio 10.4 % 10.3 % 10.3 % 10.2 % 10.8 %
Total capital 134,302 131,768 129,366 128,193 133,452
Total capital ratio 11.6 % 11.5 % 11.5 % 11.4 % 11.8 %
Total risk-adjusted assets 1,155,561 1,141,685 1,124,076 1,122,803 1,133,429
Tier I leverage ratio 7.6 % 7.5 % 7.5 % 7.3 % 7.5 %
Average balance sheet:
Assets $ 1,570,016 $ 1,544,368 $ 1,541,049 $ 1,650,501 $ 1,603,540
Earning assets 1,483,598 1,453,969 1,452,756 1,552,441 1,504,564
Loans 1,074,936 1,072,460 1,061,023 1,173,799 1,125,998
Deposits 1,063,415 1,046,349 1,053,740 1,110,194 1,103,687
Shareholders’ equity 121,840 118,879 112,892 116,702 114,132

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Second Bancorp Incorporated and Subsidiary
Financial Highlights
Quarterly Data
(Dollars in thousands, except per share data)

                                           
Key ratios: (%) (1)
Return on average assets (ROA) 1.08 1.08 1.05 (1.34 ) 0.93
Return on average shareholders’ equity (ROE) 13.98 14.09 14.28 (19.01 ) 13.01
Net interest margin 3.47 3.43 3.65 3.14 3.51
Net overhead 1.39 1.66 1.81 3.40 1.91
Efficiency ratio 56.00 60.94 60.77 108.40 63.48
Credit quality:
Non-accrual loans $ 4,666 $ 5,163 $ 4,699 $ 3,821 $ 2,987
Restructured loans 38 40 43 45 47
90 day past due and accruing 5,415 3,849 3,238 3,171 2,875
Other real estate owned 1,063 918 902 961 1,170
Charge-offs $ 1,808 $ 862 $ 939 $ 1,528 $ 873
Recoveries 297 662 213 348 200
Net charge-offs $ 1,511 $ 200 $ 726 $ 1,180 $ 673
Reserve for loan losses as a percent of period-end loans (%) 1.45 1.47 1.42 1.42 0.98
Net charge-offs (annualized) as a percent of average loans (%) 0.56 0.07 0.27 0.40 0.24

(1)   Based on income before accounting change.

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Second Bancorp Incorporated and Subsidiary

Consolidated Statements of Income

Quarterly Data

(Dollars in thousands, except per share data)

                                               
June 2001 March 2001 Dec. 2000 Sept. 2000 June 2000
INTEREST INCOME
Loans (including fees):
Taxable $ 21,751 $ 22,101 $ 23,029 $ 23,367 $ 22,887
Exempt from federal income taxes 279 288 276 285 238
Securities:
Taxable 5,302 5,125 5,581 5,419 5,261
Exempt from federal income taxes 775 773 773 777 777
Federal funds sold and other temp. investments 298 191 131 46 16
Total interest income 28,405 28,478 29,790 29,894 29,179
INTEREST EXPENSE
Deposits 11,192 11,469 11,829 12,216 11,312
Federal funds purchased and securities sold under agreements to repurchase 1,053 1,187 1,560 1,440 1,356
Note Payable 16 18 6 0 0
Other borrowed funds 15 37 25 46 58
Federal Home Loan Bank advances 3,831 3,851 3,662 4,586 3,808
Total interest expense 16,107 16,562 17,082 18,288 16,534
Net interest income 12,298 11,916 12,708 11,606 12,645
Provision for loan losses 1,342 761 903 4,843 696
Net interest income after provision for loan losses 10,956 11,155 11,805 6,763 11,949
NON-INTEREST INCOME
Service charges on deposit accounts 1,273 1,261 1,110 1,163 1,079
Trust fees 749 756 1,012 833 1,049
Gain (loss) on sale of loans 1,106 783 490 (3,191 ) 309
Trading account gains (losses) 13 58 10 (28 ) (431 )
Security (losses) gains (12 ) 529 98 (2,802 ) 206
Other operating income 1,502 1,172 1,164 1,167 1,234
Total non-interest income 4,631 4,559 3,884 (2,858 ) 3,446
NON-INTEREST EXPENSE
Salaries and employee benefits 5,096 5,194 4,891 5,421 5,189
Net occupancy 1,062 1,116 1,040 1,062 1,037
Equipment 921 1,049 995 1,044 959
Professional services 397 343 651 1,650 698
Assessment on deposits and other taxes 405 401 423 423 425
Amortization of goodwill and other intangibles 80 81 108 216 115
Other operating expenses 1,844 1,867 2,237 3,324 2,008
Total non-interest expense 9,805 10,051 10,345 13,140 10,431
Income before federal income taxes 5,782 5,663 5,344 (9,235 ) 4,964
Income tax expense 1,524 1,475 1,314 (3,690 ) 1,251
Income before accounting change 4,258 4,188 4,030 (5,545 ) 3,713
Cumulative effect of accounting change, net of tax — (101 ) — — —
Net income $ 4,258 $ 4,087 $ 4,030 ($5,545 ) $ 3,713
NET INCOME PER COMMON SHARE:
Basic before accounting change $ 0.42 $ 0.42 $ 0.40 ($0.55 ) $ 0.36
Basic $ 0.42 $ 0.41 $ 0.40 ($0.55 ) $ 0.36
Diluted before accounting change $ 0.42 $ 0.42 $ 0.40 ($0.55 ) $ 0.36
Diluted $ 0.42 $ 0.41 $ 0.40 ($0.55 ) $ 0.36
Weighted average common shares outstanding:
Basic 10,007,904 10,020,097 10,050,177 10,161,386 10,318,828
Diluted 10,103,060 10,046,562 10,069,215 10,161,386 10,340,082
Note: Fully taxable equivalent adjustment $ 568 $ 571 $ 540 $ 547 $ 547

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Second Bancorp Incorporated and Subsidiary

Consolidated Average Balance Sheets

For the Quarter Ended

(Dollars in Thousands)

                                               
June 2001 March 2001 Dec. 2000 Sept. 2000 June 2000
ASSETS
Cash and demand balances due from banks $ 30,980 $ 33,942 $ 31,139 $ 34,439 $ 34,628
Federal funds sold and other temp. investments 27,222 12,146 7,979 2,750 869
Trading Account 141 165 161 811 1,110
Securities 381,299 369,198 383,593 375,081 376,587
Loans:
Commercial 434,445 425,127 419,442 412,356 401,787
Consumer 318,937 309,135 295,209 272,322 245,457
Real estate 321,554 338,198 346,372 489,121 478,754
Total loans 1,074,936 1,072,460 1,061,023 1,173,799 1,125,998
Reserve for loan losses 15,743 15,594 15,129 11,578 11,451
Net loans 1,059,193 1,056,866 1,045,894 1,162,221 1,114,547
Premises and equipment 17,448 17,923 17,867 18,032 18,493
Goodwill and intangible assets 6,471 6,067 6,111 5,416 5,620
Other 47,262 48,061 48,305 51,751 51,686
Total assets $ 1,570,016 $ 1,544,368 $ 1,541,049 $ 1,650,501 $ 1,603,540
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Demand deposits (non-interest bearing) $ 110,124 $ 107,260 $ 110,053 $ 112,662 $ 113,958
Demand deposits (interest bearing) 88,920 83,381 83,694 85,432 89,531
Savings 234,781 242,120 252,990 265,319 273,879
Time deposits 629,590 613,588 607,003 646,781 626,319
Total deposits 1,063,415 1,046,349 1,053,740 1,110,194 1,103,687
Federal funds purchased and securities sold under agreements to repurchase 111,816 109,724 126,942 117,645 117,236
Note payable 1,000 1,000 292 0 0
Borrowed funds 1,554 2,230 1,251 2,568 3,470
Accrued expenses and other liabilities 10,223 9,002 6,630 9,060 9,435
Federal Home Loan Bank advances 260,168 257,184 239,302 294,332 255,580
Total liabilities 1,448,176 1,425,489 1,428,157 1,533,799 1,489,408
Shareholders’ equity:
Common stock 37,046 36,945 36,936 36,962 36,955
Treasury shares (14,739 ) (14,465 ) (13,174 ) (12,172 ) (9,931 )
Other comprehensive income 2,364 1,493 (3,268 ) (6,957 ) (10,155 )
Retained earnings 97,169 94,906 92,398 98,869 97,263
Total shareholders’ equity 121,840 118,879 112,892 116,702 114,132
Total liabilities and shareholders’ equity $ 1,570,016 $ 1,544,368 $ 1,541,049 $ 1,650,501 $ 1,603,540

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Second Bancorp Incorporated and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands)

                                               
June 30 March 31 December 31 September 30 June 30
2001 2001 2000 2000 2000
ASSETS
Cash and due from banks $ 36,024 $ 36,937 $ 35,272 $ 34,079 $ 38,526
Federal funds sold and other temp. investments 27,979 25,451 0 8,000 0
Trading Account 0 238 328 447 944
Securities 380,262 377,323 382,098 400,176 370,250
Loans:
Commercial 434,416 432,633 421,229 426,407 402,082
Consumer 322,776 314,290 302,881 285,959 259,923
Real estate 317,847 329,361 345,979 347,164 495,118
Total loans 1,075,039 1,076,284 1,070,089 1,059,530 1,157,123
Less reserve for loan losses 15,609 15,778 15,217 15,040 11,378
Net loans 1,059,430 1,060,506 1,054,872 1,044,490 1,145,745
Premises and equipment 17,122 17,533 18,039 17,798 18,119
Accrued interest receivable 9,759 10,118 11,181 10,630 10,508
Goodwill and intangible assets 7,547 6,157 6,038 6,193 5,472
Other assets 40,247 37,568 38,462 39,804 43,349
Total assets $ 1,578,370 $ 1,571,831 $ 1,546,290 $ 1,561,617 $ 1,632,913
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand — non-interest bearing $ 109,477 $ 105,920 $ 110,045 $ 107,391 $ 115,380
Demand — interest bearing 90,077 86,124 87,268 83,991 88,184
Savings 234,314 239,661 246,056 262,024 269,925
Time deposits 625,890 629,851 592,766 630,971 631,960
Total deposits 1,059,758 1,061,556 1,036,135 1,084,377 1,105,449
Federal funds purchased and securities sold under agreements to repurchase 117,275 119,684 129,895 116,707 124,930
Note payable 1,000 1,000 1,000 0 0
Other borrowed funds 4,981 46 2,163 3,622 2,609
Federal Home Loan Bank advances 261,447 256,591 251,733 238,872 276,009
Accrued expenses and other liabilities 10,802 10,986 8,167 6,020 8,548
Total liabilities 1,455,263 1,449,863 1,429,093 1,449,598 1,517,545
Shareholders’ equity:
Common stock, no par value; 30,000,000 shares authorized; 37,166 36,953 36,935 36,952 36,974
Treasury stock (14,740 ) (14,740 ) (13,947 ) (12,590 ) (11,646 )
Other comprehensive income 1,810 2,950 281 (3,849 ) (8,631 )
Retained earnings 98,871 96,805 93,928 91,506 98,671
Total shareholders’ equity 123,107 121,968 117,197 112,019 115,368
Total liabilities and shareholders’ equity $ 1,578,370 $ 1,571,831 $ 1,546,290 $ 1,561,617 $ 1,632,913
Miscellaneous data:
Common shares issued 10,802,510 10,785,760 10,787,310 10,776,870 10,776,870
Treasury shares 785,000 785,000 730,200 639,920 575,720
Bank owned life insurance (in other assets) $ 30,645 $ 30,270 $ 29,895 $ 29,527 $ 29,163
Loans serviced for others $ 565,044 $ 487,253 $ 472,120 $ 462,957 $ 325,012
Mortgage servicing rights $ 5,688 $ 4,261 $ 4,065 $ 4,102 $ 3,172
Goodwill 1,061 1,107 1,154 1,213 1,379
Other intangibles 798 789 819 878 921
Total goodwill and intangibles assets $ 7,547 $ 6,157 $ 6,038 $ 6,193 $ 5,472

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Second Bancorp Incorporated and Subsidiary

Financial Highlights

Year-to-Date Data

(Dollars in thousands, except per share data)

                                             
June 2001 March 2001 Dec. 2000 Sept. 2000 June 2000
Earnings:
Net interest income $ 24,214 $ 11,916 $ 49,377 $ 36,669 $ 25,063
Provision for loan losses 2,103 761 7,129 6,226 1,383
Non-interest income 8,602 3,972 11,009 7,233 7,578
Security gains (losses) 517 529 (2,399 ) (2,497 ) (12 )
Trading account 71 58 (335 ) (345 ) (317 )
Non-interest expense 19,856 10,051 44,213 33,868 20,728
Federal income taxes 2,999 1,475 176 (1,138 ) 2,552
Income before accounting change 8,446 4,188 6,134 2,104 7,649
Cumulative effect of accounting change, net of tax (101 ) (101 ) 0 0 0
Net income $ 8,345 $ 4,087 $ 6,134 $ 2,104 $ 7,649
Per share:
Basic earnings before accounting change $ 0.84 $ 0.42 $ 0.60 $ 0.20 $ 0.74
Basic earnings 0.83 0.41 0.60 0.20 0.74
Diluted earnings before accounting change 0.84 0.42 0.60 0.20 0.74
Diluted earnings 0.83 0.41 0.60 0.20 0.74
Common dividends 0.34 0.17 0.64 0.48 0.32
Book value 12.29 12.20 11.65 11.05 11.31
Tangible book value 12.15 12.04 11.46 10.88 11.12
Market value 22.90 17.50 14.50 14.13 15.19
Weighted average shares outstanding:
Basic 10,013,966 10,020,097 10,247,025 10,294,922 10,362,424
Diluted 10,079,973 10,046,562 10,271,548 10,318,413 10,396,194
Period end balance sheet:
Assets $ 1,578,370 $ 1,571,831 $ 1,546,290 $ 1,561,617 $ 1,632,913
Securities 380,262 377,323 382,098 400,176 370,250
Total loans 1,075,039 1,076,284 1,070,089 1,059,530 1,157,123
Reserve for loan losses 15,609 15,778 15,217 15,040 11,378
Deposits 1,059,758 1,061,556 1,036,135 1,084,377 1,105,449
Total shareholders’ equity 123,107 121,968 117,197 112,019 115,368
Tier I capital 119,857 117,497 115,315 114,158 122,074
Tier I ratio 10.4 % 10.3 % 10.3 % 10.2 % 10.8 %
Total capital 134,302 131,768 129,366 128,193 133,452
Total capital ratio 11.6 % 11.5 % 11.5 % 11.4 % 11.8 %
Total risk-adjusted assets 1,155,561 1,141,685 1,124,076 1,122,803 1,133,429
Tier I leverage ratio 7.6 % 7.5 % 7.5 % 7.3 % 7.5 %
Average balance sheet:
Assets $ 1,557,263 $ 1,544,368 $ 1,584,016 $ 1,598,443 $ 1,572,128
Earning assets 1,468,866 1,453,969 1,488,334 1,500,280 1,473,913
Loans 1,073,705 1,072,460 1,107,948 1,123,704 1,098,381
Deposits 1,054,929 1,046,349 1,091,441 1,104,100 1,101,020
Shareholders’ equity 120,368 118,879 114,652 115,243 114,506
Key ratios: (%) (1)
Return on average assets (ROA) 1.08 1.08 0.39 0.18 0.97
Return on average shareholders’ equity (ROE) 14.03 14.09 5.35 2.43 13.36
Net interest margin 3.45 3.43 3.46 3.41 3.56
Net overhead 1.52 1.66 2.23 2.37 1.87
Efficiency ratio 58.36 60.94 70.67 74.31 62.54
Credit quality:
Non-accrual loans $ 4,666 $ 5,163 $ 4,699 $ 3,821 $ 2,987
Restructured loans 38 40 43 45 47
90 day past due and accruing 5,415 3,849 3,238 3,171 2,875
Other real estate owned 1,063 918 902 961 1,170
Charge-offs $ 2,670 $ 862 $ 4,059 $ 3,120 $ 1,592
Recoveries 959 662 978 765 417
Net charge-offs $ 1,711 $ 200 $ 3,081 $ 2,355 $ 1,175
Reserve for loan losses as a percent of period-end loans (%) 1.45 1.47 1.42 1.42 0.98
Net charge-offs (annualized) as a percent of average loans (%) 0.32 0.07 0.28 0.28 0.21

(1)   Based on income before accounting change.

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Second Bancorp Incorporated and Subsidiary

Consolidated Statements of Income

Year-to-Date Data

(Dollars in thousands, except per share data)

                                               
June 2001 March 2001 Dec. 2000 Sept. 2000 June 2000
INTEREST INCOME
Loans (including fees):
Taxable $ 43,852 $ 22,101 $ 90,819 $ 67,790 $ 44,423
Exempt from federal income taxes 567 288 1,014 738 453
Securities:
Taxable 10,427 5,125 20,970 15,389 9,970
Exempt from federal income taxes 1,548 773 3,209 2,436 1,659
Federal funds sold and other temp. investments 489 191 286 155 109
Total interest income 56,883 28,478 116,298 86,508 56,614
INTEREST EXPENSE
Deposits 22,661 11,469 46,236 34,407 22,191
Federal funds purchased and securities sold under agreements to repurchase 2,240 1,187 5,540 3,980 2,540
Note Payable 34 18 25 19 19
Other borrowed funds 52 37 172 147 101
Federal Home Loan Bank advances 7,682 3,851 14,948 11,286 6,700
Total interest expense 32,669 16,562 66,921 49,839 31,551
Net interest income 24,214 11,916 49,377 36,669 25,063
Provision for loan losses 2,103 761 7,129 6,226 1,383
Net interest income after provision for loan losses 22,111 11,155 42,248 30,443 23,680
NON-INTEREST INCOME
Service charges on deposit accounts 2,534 1,261 4,406 3,296 2,133
Trust fees 1,505 756 3,898 2,886 2,053
Gain (loss) on sale of loans 1,889 783 (2,001 ) (2,491 ) 700
Trading account gains (losses) 71 58 (335 ) (345 ) (317 )
Security gains (losses) 517 529 (2,399 ) (2,497 ) 305
Other operating income 2,674 1,172 4,706 3,542 2,375
Total non-interest income 9,190 4,559 8,275 4,391 7,249
NON-INTEREST EXPENSE
Salaries and employee benefits 10,290 5,194 20,817 15,926 10,505
Net occupancy 2,178 1,116 4,191 3,151 2,089
Equipment 1,970 1,049 3,985 2,990 1,946
Professional services 740 343 3,476 2,825 1,175
Assessment on deposits and other taxes 806 401 1,684 1,261 838
Amortization of goodwill and other intangibles 161 81 555 447 231
Other operating expenses 3,711 1,867 9,505 7,268 3,944
Total non-interest expense 19,856 10,051 44,213 33,868 20,728
Income before federal income taxes 11,445 5,663 6,310 966 10,201
Income tax expense 2,999 1,475 176 (1,138 ) 2,552
Income before accounting change 8,446 4,188 6,134 2,104 7,649
Cumulative effect of accounting change, net of tax (101 ) (101 ) — — —
Net income $ 8,345 $ 4,087 $ 6,134 $ 2,104 $ 7,649
NET INCOME PER COMMON SHARE:
Basic before accounting change $ 0.84 $ 0.42 $ 0.60 $ 0.20 $ 0.74
Basic $ 0.83 $ 0.41 $ 0.60 $ 0.20 $ 0.74
Diluted before accounting change $ 0.84 $ 0.42 $ 0.60 $ 0.20 $ 0.74
Diluted $ 0.83 $ 0.41 $ 0.60 $ 0.20 $ 0.74
Weighted average common shares outstanding:
Basic 10,013,966 10,020,097 10,247,025 10,294,922 10,362,424
Diluted 10,079,973 10,046,562 10,271,548 10,318,413 10,396,194
Note: Fully taxable equivalent adjustment $ 1,139 $ 571 $ 2,175 $ 1,635 $ 1,137

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Second Bancorp Incorporated and Subsidiary

Consolidated Average Balance Sheets

For the Year-to-date period ended:

(Dollars in Thousands)

                                               
June 2001 March 2001 Dec. 2000 Sept. 2000 June 2000
ASSETS
Cash and demand balances due from banks $ 32,453 $ 33,942 $ 33,787 $ 34,676 $ 34,796
Federal funds sold 19,726 12,146 4,682 3,575 3,992
Trading Account 153 165 754 953 1,025
Securities 375,282 369,198 374,950 372,048 370,515
Loans:
Commercial 429,812 425,127 408,163 404,376 400,342
Consumer 314,063 309,135 258,847 246,638 233,655
Real estate 329,830 338,198 440,938 472,690 464,384
Total loans 1,073,705 1,072,460 1,107,948 1,123,704 1,098,381
Reserve for loan losses 15,669 15,594 12,398 11,481 11,432
Net loans 1,058,036 1,056,866 1,095,550 1,112,223 1,086,949
Premises and equipment 17,684 17,923 18,272 18,408 18,598
Goodwill and intangible assets 6,270 6,067 5,739 5,614 5,714
Other 47,659 48,061 50,282 50,946 50,539
Total assets $ 1,557,263 $ 1,544,368 $ 1,584,016 $ 1,598,443 $ 1,572,128
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Demand deposits (non-interest bearing) $ 108,700 $ 107,260 $ 112,185 $ 112,901 $ 113,022
Demand deposits (interest bearing) 86,166 83,381 86,818 87,867 89,098
Savings 238,430 242,120 266,863 271,521 274,656
Time deposits 621,633 613,588 625,575 631,811 624,244
Total deposits 1,054,929 1,046,349 1,091,441 1,104,100 1,101,020
Federal funds purchased and securities sold under agreements to repurchase 110,776 109,724 118,070 115,091 113,800
Note payable 1,000 1,000 292 293 440
Borrowed funds 1,890 2,230 2,532 2,961 3,161
Accrued expenses and other liabilities 9,616 9,002 8,381 8,969 8,922
Federal Home Loan Bank advances 258,684 257,184 248,648 251,786 230,279
Total liabilities 1,436,895 1,425,489 1,469,364 1,483,200 1,457,622
Shareholders’ equity:
Common stock 36,996 36,945 36,957 36,964 36,965
Treasury shares (14,603 ) (14,465 ) (10,878 ) (10,107 ) (9,063 )
Net unrealized holding gains 1,931 1,493 (7,354 ) (8,726 ) (9,620 )
Retained earnings 96,044 94,906 95,927 97,112 96,224
Total shareholders’ equity 120,368 118,879 114,652 115,243 114,506
Total liabilities and shareholders’ equity $ 1,557,263 $ 1,544,368 $ 1,584,016 $ 1,598,443 $ 1,572,128

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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 hereunto duly authorized.

     
Second Bancorp Incorporated
 
Date: July 25, 2001 /s/ David L. Kellerman
David L. Kellerman, Treasurer

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