UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-32535
FIRST BANCTRUST CORPORATION
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
37-1406661
(IRS EMPLOYER IDENTIFICATION NO.)
206 SOUTH CENTRAL AVENUE
PARIS, ILLINOIS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
61944
(ZIP CODE)
217-465-6381
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
CHECK WHETHER THE ISSUER: (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 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
---
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON EQUITY AS OF THE LATEST PRACTICABLE DATE.
AS OF AUGUST 13, 2003 THE REGISTRANT HAD OUTSTANDING 1,277,510 SHARES OF COMMON
STOCK.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES [ ] NO [X]
First BancTrust Corporation
Form 10-QSB Quarterly Report
Index Page
PART I - Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheets 1
(As of June 30, 2003 and December 31, 2002)
Condensed Consolidated Statements of Income 2
(For the six months ended June 30, 2003 and 2002)
Condensed Consolidated Statements of Income 3
(For the three months ended June 30, 2003 and 2002)
Condensed Consolidated Statements of Cash Flows 4
(For the six months ended June 30, 2003 and 2002)
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3 Controls and Procedures 18
PART II - Other Information
Item 1 Legal Proceedings 19
Item 2 Changes in Securities 19
Item 3 Defaults Upon Senior Securities 19
Item 4 Submission of Matters to a Vote of Security
Holders 19
Item 5 Other Information 20
Item 6 Exhibits and Reports on Form 8-K 20
SIGNATURES 20
FIRST BANCTRUST CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2003 AND DECEMBER 31, 2002
(in thousands of dollars except share data)
JUNE 30, DECEMBER 31,
2003 2002
(unaudited)
------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 4,829 $ 6,996
Interest-bearing deposits with financial institutions 7,611 3,457
------------ ------------
Cash and cash equivalents 12,440 10,453
Available-for-sale securities 85,453 72,747
Loans held for sale 1,259 597
Loans, net of allowance for loans losses of $1,883 and $1,963 104,436 105,182
Premises and equipment 2,792 2,772
Foreclosed assets held for sale, net 133 185
Interest receivable 1,701 2,357
Loan servicing rights, net of valuation allowance of $546 and $683 875 949
Cash surrender value of life insurance 3,754 3,667
Federal Home Loan Bank stock 3,875 3,712
Other assets 227 104
------------ ------------
Total assets $ 216,945 $ 202,725
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest bearing deposits $ 15,069 $ 17,296
Interest bearing deposits 138,017 130,039
------------ ------------
Total deposits 153,086 147,335
Federal Home Loan Bank advances and other debt 35,500 26,501
Pass through payments received on loans sold 388 261
Advances from borrowers for taxes and insurance 394 133
Deferred income taxes 249 268
Interest payable 149 106
Other 493 815
------------ ------------
Total liabilities 190,259 175,419
------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares authorized
and unissued
Common stock, $.01 par value, 5,000,000 shares
authorized; 1,520,875 shares issued and outstanding 15 15
Additional paid-in capital 14,495 14,445
Retained earnings 17,019 16,243
Accumulated other comprehensive income
Unrealized appreciation on available-for-sale securities, net of
income taxes of $683 and $695 983 993
------------ ------------
32,512 31,696
Unallocated employee stock ownership plan shares -
87,461 and 95,063 shares (1,011) (1,099)
Unearned incentive plan shares - 52,841 and 56,267 shares (872) (928)
Treasury stock, at cost - 243,365 and 155,165 shares (3,943) (2,363)
------------ ------------
Total stockholders' equity 26,686 27,306
------------ ------------
Total liabilities and stockholders' equity $ 216,945 $ 202,725
============ ============
See notes to condensed consolidated financial statements.
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FIRST BANCTRUST CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2003 AND 2002
(in thousands of dollars)
(unaudited)
SIX MONTHS ENDED JUNE 30 2003 2002
-------------------------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Loans
Taxable $ 4,340 $ 4,485
Tax exempt 18 22
Available-for-sale securities
Taxable 1,364 1,755
Tax exempt 155 145
Deposits with financial institutions 35 69
Dividends on Federal Home Loan Bank stock and other 107 61
---------- ----------
Total interest and dividend income 6,019 6,537
---------- ----------
INTEREST EXPENSE
Deposits 1,654 2,279
Federal Home Loan Bank advances and other debt 680 582
---------- ----------
Total interest expense 2,334 2,861
---------- ----------
NET INTEREST INCOME 3,685 3,676
Provision for loan losses 333 496
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,352 3,180
---------- ----------
NONINTEREST INCOME
Customer service fees 366 222
Other service charges and fees 446 371
Net gains on loan sales 421 596
Net loan servicing cost (67) (364)
Brokerage fees 57 90
Abstract and title fees 227 184
Other 139 145
---------- ----------
Total noninterest income 1,589 1,244
---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 2,051 1,961
Net occupancy expense 102 91
Equipment expense 337 292
Data processing fees 206 228
Advertising and promotion expense 112 83
Professional fees 148 180
Foreclosed assets expense, net 61 83
Other expenses 451 381
---------- ----------
Total noninterest expense 3,468 3,299
---------- ----------
INCOME BEFORE INCOME TAX 1,473 1,125
Income tax expense 502 407
---------- ----------
NET INCOME 971 718
---------- ----------
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized appreciation (depreciation) on available-for-sale securities (10) 517
---------- ----------
COMPREHENSIVE INCOME $ 961 $ 1,235
========== ==========
BASIC EARNINGS PER SHARE $ 0.83 $ 0.54
========== ==========
DILUTED EARNINGS PER SHARE $ 0.79 $ 0.54
========== ==========
See notes to condensed consolidated financial statements.
-2-
FIRST BANCTRUST CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2003 AND 2002
(in thousands of dollars)
(unaudited)
THREE MONTHS ENDED JUNE 30 2003 2002
----------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Loans
Taxable $ 2,108 $ 2,250
Tax exempt 9 11
Available-for-sale securities
Taxable 650 891
Tax exempt 80 73
Deposits with financial institutions 18 34
Dividends on Federal Home Loan Bank stock and other 51 41
---------- ----------
Total interest and dividend income 2,916 3,300
---------- ----------
INTEREST EXPENSE
Deposits 807 1,119
Federal Home Loan Bank advances and other debt 365 293
---------- ----------
Total interest expense 1,172 1,412
---------- ----------
NET INTEREST INCOME 1,744 1,888
Provision for loan losses 169 297
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,575 1,591
---------- ----------
NONINTEREST INCOME
Customer service fees 201 127
Other service charges and fees 234 180
Net gains on loan sales 255 432
Net loan servicing cost (25) (220)
Brokerage fees 22 88
Abstract and title fees 122 80
Other 68 76
---------- ----------
Total noninterest income 877 763
---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 1,022 1,044
Net occupancy expense 48 46
Equipment expense 163 137
Data processing fees 105 115
Advertising and promotion expense 62 43
Professional fees 73 88
Foreclosed assets expense, net 36 42
Other expenses 217 184
---------- ----------
Total noninterest expense 1,726 1,699
---------- ----------
INCOME BEFORE INCOME TAX 726 655
Income tax expense 267 215
---------- ----------
NET INCOME 459 440
---------- ----------
OTHER COMPREHENSIVE INCOME
Unrealized appreciation on available-for-sale securities 384 888
---------- ----------
COMPREHENSIVE INCOME $ 843 $ 1,328
========== ==========
BASIC EARNINGS PER SHARE $ 0.40 $ 0.34
========== ==========
DILUTED EARNINGS PER SHARE $ 0.38 $ 0.34
========== ==========
See notes to condensed consolidated financial statements.
-3-
FIRST BANCTRUST CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2003 AND 2002
(in thousands of dollars)
(unaudited)
SIX MONTHS ENDED JUNE 30 2003 2002
------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 971 $ 718
Items not requiring (providing) cash
Depreciation and amortization 137 129
Provision for loan losses 333 496
Investment securities amortization, net 272 --
Amortization of loan servicing rights 467 615
Recovery of impairment of loan servicing rights (137) --
Deferred income taxes (12) 4
Net loss on sales of foreclosed assets 22 4
Net gains on loan sales (421) (596)
Loans originated for sale (27,825) (15,223)
Proceeds from sales of loans originated for resale 27,328 15,241
Federal Home Loan Bank stock dividends (107) (43)
Compensation expense related to employee stock ownership plan 141 118
Compensation expense related to incentive plan 55 18
Changes in
Interest receivable 656 106
Cash surrender value (87) (85)
Other assets (179) 4
Interest payable 43 36
Other liabilities (322) (227)
---------- ----------
Net cash provided by operating activities 1,335 1,315
---------- ----------
INVESTING ACTIVITIES
Purchases of available-for-sale securities (57,010) (29,574)
Proceeds from maturities of available-for-sale securities 44,015 10,187
Proceeds from sales of available-for-sale securities -- 179
Purchase of Federal Home Loan Bank stock -- (2,000)
Net collections (originations) in loans 151 (4,753)
Proceeds from sales of foreclosed assets 292 559
Purchases of premises and equipment (157) (84)
---------- ----------
Net cash used by investing activities (12,709) (25,486)
---------- ----------
FINANCING ACTIVITIES
Net increase in demand deposits, money market,
NOW and savings deposits 5,992 124
Net increase (decrease) in certificates of deposit (241) 18,862
Proceeds from the issuance of Federal Home Loan Bank advances 18,000 --
Repayment of Federal Home Loan Bank advances and other debt (9,001) (8)
Pass through payments received on loans sold 127 (245)
Net increases (decreases) in advances by borrowers for taxes and
insurance 261 (65)
Dividends paid (196) (143)
Purchase of treasury stock (1,581) (774)
Purchase of stock for recognition and retention plan -- (297)
---------- ----------
Net cash provided by financing activities 13,361 17,454
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,987 (6,717)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 10,453 16,746
---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 12,440 $ 10,029
========== ==========
SUPPLEMENTAL CASH FLOWS INFORMATION
Real estate acquired in settlement of loans $ 262 $ 372
Interest paid $ 2,291 $ 2,825
Income tax paid $ 875 $ 557
See notes to condensed consolidated financial statements.
-4-
FIRST BANCTRUST CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements
have been prepared pursuant to the rules and regulations for reporting on Form
10-QSB. Accordingly, certain disclosures required by accounting principles
generally accepted in the United States of America are not included herein.
These interim statements should be read in conjunction with the audited
consolidated financial statements and notes thereto, dated January 17, 2003,
included in the Company's Form 10-KSB filed with the Securities and Exchange
Commission.
Interim statements are subject to possible adjustments in connection with the
annual audit of the Company for the year ended December 31, 2003. In the opinion
of management of the Company, the accompanying unaudited interim condensed
consolidated financial statements reflect all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the consolidated
financial position and consolidated results of operations for the periods
presented. The results of operations for the three and six months ended June 30,
2003 and 2002 are not necessarily indicative of the results to be expected for
the full year.
Note 2 - Conversion to Stock Form of Ownership
On October 16, 2000 the Board of Directors of First Bank & Trust, sb (the
"Bank") adopted a Plan of Conversion to convert from an Illinois mutual savings
bank to an Illinois stock savings bank with the concurrent formation of a
holding company. First BancTrust Corporation (the "Company") was incorporated in
November 2000. A subscription offering of the shares of common stock, $0.01 par
value per share ("Common Stock"), of the Company was offered initially to
eligible deposit account holders of First Bank & Trust, sb. The Bank's
conversion from an Illinois mutual savings bank to an Illinois stock savings
bank was completed on April 18, 2001 (the "Conversion").
In connection with the conversion, the Company issued 1,520,875 shares of common
stock to the public for gross proceeds of $15.2 million, $14.4 million net of
conversion costs. The Bank issued all of its outstanding capital stock to the
Company in exchange for one-half of the net proceeds of the offering, which
amounted to $7.2 million. The Company accounted for the purchase in a manner
similar to a pooling of interests, whereby assets and liabilities of the Bank
maintain their historical cost basis in the consolidated company.
Note 3 - Employee Stock Ownership Plan
In connection with the conversion, the Bank established an Employee Stock
Ownership Plan ("ESOP") for the benefit of its employees. In the initial stock
offering, deposit account owners purchased all available shares. The ESOP
purchased required shares in the open market subsequent to the conversion date
for $1.4 million with funds borrowed from the Company. The
-5-
ESOP expense was $75,000 and $62,000 for the three-month periods ended June 30,
2003 and 2002, and $141,000 and $118,000 for the six-month periods ended June
30, 2003 and 2002.
Shares purchased by the ESOP with the loan proceeds are held in a suspense
account and are allocated to ESOP participants based on a pro rata basis as debt
service payments are made to the Company. The loan is secured by the shares
purchased with the proceeds and will be repaid by the ESOP with funds from the
Company's discretionary contributions to the ESOP and earnings on ESOP assets.
Principal payments are scheduled to occur over an eight-year period.
Note 4 - Earnings per Share
Basic earnings per share have been computed based upon the weighted average
common shares outstanding for the three-month and six-month periods ended June
30, 2003 and 2002. Diluted earnings per share reflect the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.
Earnings per share were computed as follows (dollar amounts in thousands except
share data):
-6-
Weighted
Average Per Share
Income Shares Amount
------------ ------------ ------------
FOR THE SIX MONTHS ENDED JUNE 30, 2003:
---------------------------------------------------
Basic Earnings Per Share:
Income available to common stockholders $ 971 1,162,230 $ 0.83
Effect of Dilutive Securities:
Unearned recognition and retention plan shares 56,447
Stock options 3,033
------------ ------------ ------------
Diluted Earnings per Share:
Income available to common stockholders and
assumed conversions $ 971 1,221,710 $ 0.79
============ ============ ============
FOR THE SIX MONTHS ENDED JUNE 30, 2002:
---------------------------------------------------
Basic Earnings Per Share:
Income available to common stockholders $ 718 1,325,528 $ 0.54
Effect of Dilutive Securities:
Unearned recognition and retention plan shares 2,726
------------ ------------ ------------
Diluted Earnings per Share:
Income available to common stockholders and
assumed conversions $ 718 1,328,254 $ 0.54
============ ============ ============
FOR THE THREE MONTHS ENDED JUNE 30, 2003:
---------------------------------------------------
Basic Earnings Per Share:
Income available to common stockholders $ 459 1,138,103 $ 0.40
Effect of Dilutive Securities:
Unearned recognition and retention plan shares 56,626
Stock options 6,066
------------ ------------ ------------
Diluted Earnings per Share:
Income available to common stockholders and
assumed conversions $ 459 1,200,795 $ 0.38
============ ============ ============
FOR THE THREE MONTHS ENDED JUNE 30, 2002:
---------------------------------------------------
Basic Earnings Per Share:
Income available to common stockholders $ 440 1,303,847 $ 0.34
Effect of Dilutive Securities:
Unearned recognition and retention plan shares 5,451
------------ ------------ ------------
Diluted Earnings per Share:
Income available to common stockholders and
assumed conversions $ 440 1,309,298 $ 0.34
============ ============ ============
-7-
Note 5 -- Stock Options
The Company has a stock-based employee compensation plan, which is described
more fully in Notes to Financial Statements included in the December 31, 2002
Annual Report to shareholders. The Company accounts for this 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 the
plan 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 Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, to stock-based employee compensation.
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
------------- ------------- ------------- -------------
Net income, as reported $ 459 $ 440 $ 971 $ 718
Less: Total stock-based employee
compensation cost determined under
the fair value based method, net of
income taxes (16) --- (16) ---
---------- ---------- ---------- ----------
Pro forma net income $ 443 $ 440 $ 955 $ 718
========== ========== ========== ==========
EARNINGS PER SHARE:
Basic - as reported $ 0.40 $ 0.34 $ 0.83 $ 0.54
Basic - pro forma $ 0.39 $ 0.34 $ 0.82 $ 0.54
Diluted - as reported $ 0.38 $ 0.34 $ 0.79 $ 0.54
Diluted - pro forma $ 0.37 $ 0.34 $ 0.78 $ 0.54
-8-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995 as amended, and is including this statement for purposes of these
safe harbor provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project," or similar expressions. The
Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse
affect on the operations and future prospects of the Company and its
wholly-owned subsidiaries include, but are not limited to, changes in: interest
rates; general economic conditions; legislative/regulatory provisions; monetary
and fiscal policies of the U.S. Government, including policies of the U.S.
Treasury and the Federal Reserve Board; the quality of composition of the loan
or investment portfolios; demand for loan products; deposit flows; competition;
demand for financial services in the Company's market area; and accounting
principles, policies, and guidelines. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statement. Further information concerning the Company and
its business, including additional factors that could materially affect the
Company's financial results, is included in the Company's filings with the
Securities and Exchange Commission.
The following discussion compares the financial condition of First BancTrust
Corporation (Company), First Bank & Trust, s.b. (Bank), First Charter Service
Corporation, ECS Service Corporation, and the Bank's wholly owned subsidiary,
Community Finance Center, Inc. at June 30, 2003 to its financial condition at
December 31, 2002 and the results of operations for the three-month and
six-month periods ending June 30, 2003 to the same periods in 2002. In February
2002, the Company filed a declaration to become a financial holding company
which became effective March 16, 2002. Ownership of First Charter Service
Corporation and ECS Service Corporation was transferred from the Bank to the
Company in 2002. Application has been made and approved by regulators to
establish a new banking facility in Savoy, Illinois in Champaign County. It is
anticipated that operations will begin in October, 2003. This discussion should
be read in conjunction with the interim financial statements and notes included
herein.
FINANCIAL CONDITION
Total assets of the Company increased by $14.2 million or 7.0%, to $216.9
million at June 30, 2003 from $202.7 million at December 31, 2002. The increase
in assets was primarily due to an increase in cash and cash equivalents of $2.0
million, and increases in available-for-sale securities of $12.7 million, loans
held for sale of $662,000, Federal Home Loan Bank stock of $163,000 and other
assets of $123,000 offset by decreases in loans, net of allowance for loan
losses, of $746,000,
-9-
and interest receivable of $656,000. The increase in assets was funded by
increases in deposits and Federal Home Loan Bank borrowings.
The Company's cash and due from banks decreased by $2.2 million or 31.0% to $4.8
million at June 30, 2003 from $7.0 million at December 31, 2002. This decrease
was more than offset by an increase in interest-bearing demand deposits of $4.2
million or 120.2% to $7.6 million at June 30, 2003 compared to $3.5 million at
December 31, 2002. Available-for-sale investment securities amounted to $85.5
million at June 30, 2003 compared to $72.7 million at December 31, 2002, a $12.7
million or 17.5% increase. The increase resulted from $57.0 million in
investment purchases, primarily in mortgage-backed securities and Federal Home
Loan Bank ("FHLB") agency bonds, offset by calls, maturities, and pre-payments
of $44.0 million, and amortization of premiums of $272,000. The increase in
available-for-sale investments was primarily funded by Federal Home Loan Bank
advances and deposits.
Loans held for sale increased by $662,000 from $597,000 at December 31, 2002 to
$1.3 million at June 30, 2003. This increase is primarily due to continued
refinancing activity at lower fixed interest rates on loans to be sold in the
secondary market. Loans held for sale at June 30, 2003 consisted entirely of
single-family residential loans.
The Company's net loan portfolio decreased by $746,000 to $104.4 million at June
30, 2003 from $105.2 million at December 31, 2002. Gross loans decreased by
$826,000 while the allowance for loan losses decreased by $80,000. Loans secured
by 1-4 family residences decreased by $2.6 million as borrowers continued to
refinance existing loans to fixed-rate loans to take advantage of the lower
interest rates. These loans were then sold into the secondary market. During the
first six months of 2003, residential loans originated for resale into the
secondary market totaled $23.9 million compared to $8.9 million in the first six
months of 2002. Agricultural production loans increased by $1.7 million and
farmland loans increased by $1.0 while commercial loans increased by $440,000
and consumer loans decreased $1.2 million.
At June 30, 2003, the allowance for loan losses was $1.9 million or 1.77% of the
total loan portfolio compared to $2.0 million, or 1.83% at December 31, 2002.
During 2003, the Company charged off $468,000 of loan losses, of which $233,000
pertained to one agricultural credit secured by farm equipment. The chargeoffs
of $468,000 were partially offset by $56,000 in recoveries. The Company's
nonperforming loans and troubled debt restructurings as a percentage of total
loans decreased from 2.25% or $2.4 million at December 31, 2002 compared to
1.83% or $1.9 million at June 30, 2003. This decrease was primarily a result of
reduced delinquencies 90 days and over that declined from $1.5 million at
December 31, 2002 to $1.3 million at June 30, 2003, and troubled debt
restructurings totaled $888,000 at December 31, 2002 compared to $615,000 at
June 30, 2003. The Company's troubled debt restructurings of $615,000 at June
30, 2003 consists primarily of restructured commercial and agricultural loans.
Management reviews the adequacy of the allowance for loan losses quarterly, and
believes that its allowance is adequate; however, the Company cannot assure that
future chargeoffs and/or provisions will not be necessary.
Net foreclosed assets held for sale, totaling $133,000 at June 30, 2003,
decreased $52,000, compared to $185,000 at December 31, 2002. As of June 30,
2003 the Company had three real
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estate properties totaling $95,000 which consisted of single-family dwellings,
and other repossessed assets of $38,000.
Interest receivable declined by $656,000 or 28.0% from $2.4 million to $1.7
million primarily due to annual payments received on agricultural loans. Federal
Home Loan Bank stock increased due to the receipt of dividends in the form of
stock.
Loan servicing rights declined by $74,000 from $949,000 at December 31, 2002 to
$875,000 at June 30, 2003. Gross loan servicing rights decreased by $212,000
from $1.6 million at December 31, 2002 to $1.4 million at June 30, 2003 due to
amortization of loan servicing rights of $467,000 offset by newly capitalized
assets of $255,000. The valuation allowance decreased from $683,000 at December
31, 2002 to $546,000 at June 30, 2003, a $137,000 recovery of a previous
impairment as a result of current valuations.
The Company's total deposits amounted to $153.1 million at June 30, 2003
compared to $147.3 million at December 31, 2002, an increase of $5.8 million.
The increase in total deposits was due to an $8.0 million increase in interest
bearing deposits, partially offset by a $2.2 million decrease in non-interest
bearing deposits. The increase in interest bearing deposits was a result of an
increase of $7.1 million in interest-bearing checking accounts, a $1.1 million
increase in savings accounts, partially offset by a $241,000 decrease in
certificates of deposit. The increase in interest-bearing checking accounts is
primarily due to a single short-term interest-bearing checking account opened
with public funds generated from a bond issue.
Federal Home Loan Bank advances and other debt increased by $9.0 million from
$26.5 million at December 31, 2002 to $35.5 million at June 30, 2003, primarily
to fund investment purchases. The $9.0 million net increase was primarily a
result of proceeds from the issuance of two fixed rate Federal Home Loan Bank
advances totaling $10.0 million with an average rate of 2.77%, offset by the
repayment of the open end line of credit of $1.0 million. The total average rate
of all outstanding advances was 4.04% as of June 30, 2003.
Pass through payments received on loans sold increased by $127,000 from $261,000
at December 31, 2002 to $388,000 at June 30, 2003. Advances by borrowers for
taxes and insurance increased by $261,000 from $133,000 at December 31, 2002 to
$394,000 at June 30, 2003. Other liabilities decreased by $322,000 from $815,000
at December 31, 2002 to $493,000 at June 30, 2003, primarily due to payment of
accrued income taxes.
Stockholders' equity at June 30, 2003 was $26.7 million compared to $27.3
million at December 31, 2002, a decrease of $620,000. Retained earnings
increased by the amount of net income or $971,000, partially offset by $196,000
in dividends declared and paid. Treasury stock increased from $2.4 million at
December 31, 2002 to $3.9 million at June 30, 2003 due to purchases of 88,200
shares of common stock for $1.6 million. On December 4, 2002 the Company
announced that the Board of Directors authorized the open-market stock
repurchases of up to 6.1%, or 85,477 shares of the Company's outstanding stock
over the one-year period ending October 23, 2003. On March 13, 2003 the Board of
Directors authorized the additional open-market stock repurchases of up to 3.9%,
or 46,500 shares of the Company's outstanding stock over the next one-year
period ending March 13, 2004, as in the opinion of management, market conditions
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warrant. Previously, the Company had completed two repurchase programs for stock
repurchases of 143,451 shares representing 10% of the outstanding shares. As of
August 13, 2003, the Company had repurchased a cumulative total of 243,365
shares.
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTH PERIODS ENDED JUNE 30, 2003 AND 2002
Net income for the six months ended June 30, 2003 increased by $253,000 or 35.2%
from $718,000 for the six months ended June 30, 2002 to $971,000 for the six
months ended June 30, 2003. The increase in net income is primarily due to an
increase in noninterest income and a decrease in the provision for loan losses,
partially offset by increases in noninterest expense and income tax expense.
Net interest income increased $9,000 from $3.68 million for the six months ended
June 30, 2002 to $3.69 million for the six months ended June 30, 2003. The
primary reason for the increase in net interest income was a decrease in
interest expense of $527,000 offset by a decrease of $518,000 in interest and
dividend income. The Company's net interest margin was 3.82% and 4.00% during
the six months ended June 30, 2003 and 2002, respectively. The net interest
margin decreased slightly as a result of a decrease in interest rates on
interest-bearing assets, partially offset by a decrease in interest rates on
interest-bearing liabilities.
Total interest and dividend income decreased by $518,000 or 7.9% from $6.54
million for the six months ended June 30, 2002 to $6.02 million for the six
months ended June 30, 2003. The decrease was primarily due to decreases in
interest income from loans and available-for-sale securities, partially offset
by increased dividends on Federal Home Loan Bank stock. Interest expense
declined by $527,000 or 18.4% from $2.86 million for the six months ended June
30, 2002 to $2.33 million for the six months ended June 30, 2003. This decline
was primarily due to a decrease of $625,000 in interest on deposits, partially
offset by a $98,000 increase in interest on Federal Home Loan Bank advances.
For the six months ended June 30, 2003 and 2002 the provision for losses on
loans was $333,000 and $496,000, respectively. The provision for the six months
ended June 30, 2003 was based on the Company's analysis of the allowance for
loan losses. Management meets on a quarterly basis to review the adequacy of the
allowance for loan losses by classifying loans in compliance with regulatory
classifications. Classified loans are individually reviewed to arrive at
specific reserve levels for those loans. Once the specific portion for each loan
is calculated, management calculates a historical portion for each category
based on a combination of loss history, current economic conditions, and trends
in the portfolio. While the Company cannot assure that future chargeoffs and/or
provisions will not be necessary, the Company's management believes that, as of
June 30, 2003, its allowance for loan losses was adequate.
Noninterest income increased $345,000 or 27.7% from $1.24 million for the six
months ended June 30, 2002 to $1.59 million for the six months ended June 30,
2003. The increase was primarily a result of decreased net loan servicing cost,
increased customer service fees and other
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service charges and fees, partially offset by decreased gains on loan sales. Net
loan servicing cost declined from $364,000 for the six months ended June 30,
2002 to $67,000 for the six months ended June 30, 2003, a decrease of $297,000.
This decrease was primarily a result of decreased amortization for the six
months ended June 30, 2003 of $148,000 due to the identification of an impaired
servicing asset in June 2002 and the recovery of a previously identified
impairment of $137,000 in 2003. Customer service fees increased $144,000 from
$222,000 for the six months ended June 30, 2002 to $366,000 for the six months
ended June 30, 2003. The increase of $144,000 was primarily attributable to
increased non-sufficient funds and overdraft fees. The increase in
non-sufficient funds and overdraft fees is primarily attributable to the
"Safety-Net Checking" product which provides a pre-approved amount of
overdrafts, most often $500. At June 30, 2003 there were 1,077 "Safety Net
Checking" accounts compared to 835 at June 30, 2002. Other service charges and
fees increased from $371,000 for the six months ended June 30, 2002 to $446,000
for the six months ended June 30, 2003 primarily due to fees associated with
residential mortgage loans sold into the secondary market and fees earned from
the use of debit cards.
Net gains on loan sales decreased by $175,000 from $596,000 for the six months
ended June 30, 2002 compared to $421,000 for the six months ended June 30, 2003
due to reduced capitalized servicing assets recognized. When a loan is sold into
the secondary market and the servicing rights to that loan are retained, an
asset is created representing the future payment stream of the servicing which
is recognized as income from the loan sale. The estimated useful life used to
determine the value of the asset is estimated based on the current independent
valuation of the servicing portfolio. Although loan sales into the secondary
market for the six months ended June 30, 2003 were $27.3 million compared to
$15.2 million for the six months ended June 30, 2002, the gain recognized from
the creation of the servicing assets was $255,000 for the six months ended June
30, 2003 compared to $578,000 for the six months ended June 30, 2002. Of the
$27.3 million in loans sold for the six months ended June 30, 2003, $3.2 million
were agricultural loans, compared to $6.7 million in agricultural loans sold for
the six months ended June 30, 2002. The gain recognized from the capitalization
of the servicing related to the agricultural loans was $94,000 for the six
months ended June 30, 2003 compared to $444,000 for the six months ended June
30, 2002.
Total noninterest expenses were $3.5 million for the six months ended June 30,
2003 as compared to $3.3 million for the six months ended June 30, 2002. The
primary reason for the $169,000 increase was an increase in salaries and
employee benefits of $90,000 and an increase in other expenses of $70,000.
Salaries and employee benefits increased by $90,000 from $1.96 million for the
six months ended June 30, 2002 to $2.05 million for the six months ended June
30, 2003. The $90,000 increase in salaries and employee benefits was primarily
due to normal pay increases, and increases in FICA expenses, Employee Stock
Ownership Plan ("ESOP") expense, health insurance and employee recognition and
retention expense. Salaries expense increased by $38,000 due to normal pay
increases and the addition of one full-time employee. ESOP expense increased by
$22,000 due to a higher average share price. The monthly expense for the ESOP is
determined by the average share price in the open market for the month, and as
the monthly average share price increases, the ESOP expense increases
accordingly. The Recognition and Retention Plan received shareholder approval in
April, 2002, and the expense for the six months ended June 30, 2003 was $55,000
compared to $18,000 for the six months
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ended June 30, 2002, an increase of $38,000. Other expenses increased by $70,000
from $381,000 for the six months ended June 30, 2002 to $451,000 for the six
months ended June 30, 2003. The increase in other expense was primarily due to
loan related expenses such as filing fees, blanket insurance on vehicle loans
and fees associated with secondary market loans, and postage and scholarship
foundation expense.
Income tax expense was $502,000 for the six months ended June 30, 2003 as
compared to $407,000 for the six months ended June 30, 2002. The effective tax
rates were 34.1% and 36.2%, respectively, for the six months ended June 30, 2003
and 2002.
COMPARISON OF THREE MONTH PERIODS ENDED JUNE 30, 2003 AND 2002
Net income for the three months ended June 30, 2003 increased by $19,000 or 4.3%
from $440,000 for the three months ended June 30, 2002 to $459,000 for the three
months ended June 30, 2003. The slight increase in net income is primarily due
to an increase in noninterest income and a decrease in provision for loan
losses, partially offset by a decrease in net interest income, and an increase
in noninterest expense.
Net interest income decreased $144,000 or 7.6% from $1.89 million for the three
months ended June 30, 2002 to $1.74 million for the three months ended June 30,
2003. The primary reason for the decrease in net interest income was a decrease
in interest and dividend income of $384,000 partially offset by a decrease of
$240,000 in interest expense. The Company's net interest margin was 3.74% and
4.11% during the three months ended June 30, 2003 and 2002, respectively. The
net interest margin decreased as a result of a decrease in interest rates on
interest-bearing assets, partially offset by a decrease in interest rates on
interest-bearing liabilities.
Total interest and dividend income decreased by $384,000 or 11.6% from $3.30
million for the three months ended June 30, 2002 to $2.92 million for the three
months ended June 30, 2003. The decrease was primarily due to decreases in
interest income from loans and interest income from available-for-sale
securities. Interest expense declined by $240,000 or 17.0% from $1.41 million
for the three months ended June 30, 2002 to $1.17 million for the three months
ended June 30, 2003. This decline was primarily due to a decrease of $312,000 in
interest on deposits, partially offset by a $72,000 increase in interest on
Federal Home Loan Bank advances.
For the three months ended June 30, 2003 and 2002 the provision for losses on
loans was $169,000 and $297,000, respectively. The provision for the three
months ended June 30, 2003 was based on the Company's analysis of the allowance
for loan losses. Management meets on a quarterly basis to review the adequacy of
the allowance for loan losses by classifying loans in compliance with regulatory
classifications. Classified loans are individually reviewed to arrive at
specific reserve levels for those loans. Once the specific portion for each loan
is calculated, management calculates a historical portion for each category
based on a combination of loss history, current economic conditions, and trends
in the portfolio. While the Company cannot assure that future chargeoffs and/or
provisions will not be necessary, the Company's management believes that, as of
June 30, 2003, its allowance for loan losses was adequate.
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Noninterest income increased $114,000 or 14.9% from $763,000 for the three
months ended June 30, 2002 to $877,000 for the three months ended June 30, 2003.
The increase was primarily a result of decreased net loan servicing cost, and
increased customer service fees, other service charges and fees, and abstract
and title fees, partially offset by decreased gains on loan sales and decreased
brokerage fees. Net loan servicing cost declined from $220,000 for the three
months ended June 30, 2002 to $25,000 for the three months ended June 30, 2003,
a decrease of $195,000. This decrease was primarily a result of the recovery of
a previously identified impairment of $53,000, and a reduction of amortization
of loan servicing rights of $141,000 from $346,000 for the three months ended
June 30, 2002 to $205,000 for the three months ended June 30, 2003. An
additional $105,000 was amortized in June, 2002 due the identification of an
impaired servicing asset. Customer service fees increased $74,000 from $127,000
for the three months ended June 30, 2002 to $201,000 for the three months ended
June 30, 2003. The increase of $74,000 was primarily attributable to increased
non-sufficient funds and overdraft fees. The increase in non-sufficient funds
and overdraft fees is primarily attributable to the "Safety-Net Checking"
product which provides a pre-approved amount of overdrafts, most often $500.
Other service charges and fees increased from $180,000 for the three months
ended June 30, 2002 to $234,000 for the three months ended June 30, 2003, and
abstract and title fees increased by $42,000 from $80,000 for the three months
ended June 30, 2002 to $122,000 for the six months ended June 30, 2003.
Net gains on loan sales declined by $177,000 from $432,000 for the three months
ended June 30, 2002 to $255,000 for the three months ended June 30, 2003 due to
reduced capitalized assets recognized. Loan sales for the three months ended
June 30, 2003 were $16.1 million compared to $8.3 million for the three months
ended June 30, 2002. Sales of one-to-four family loans for the three months
ended June 30, 2003 increased by $14.3 million while sales of agricultural loans
for the same period decreased by $2.8 million. The gains recognized from
capitalized servicing for agricultural loans are typically higher than gains
recognized from capitalized servicing for one-to-four family mortgage loans.
Brokerage fees declined by $66,000 from $88,000 for the three months ended June
30, 2002 to $22,000 for the three months ended June 30, 2003 due to the
resignation of the investment representative.
Total noninterest expenses were $1.73 million for the three months ended June
30, 2003 as compared to $1.70 million for the three months ended June 30, 2002.
The primary reason for the $27,000 increase was an increase in other expenses of
$33,000. Salaries and employee benefits decreased by $22,000 from $1.05 million
for the three months ended June 30, 2002 to $1.02 million for the three months
ended June 30, 2003, which was offset by a $26,000 increase in equipment expense
from $137,000 for the three months ended June 30, 2002 to $163,000 for the three
months ended June 30, 2003. Other expenses increased by $33,000 from $184,000
for the three months ended June 30, 2002 to $217,000 for the three months ended
June 30, 2003. The increase in other expenses was primarily due to loan related
expenses such as filing fees, blanket insurance on vehicle loans and fees
associated with secondary market loans, and postage and scholarship foundation
expense.
Income tax expense was $267,000 for the three months ended June 30, 2003 as
compared to $215,000 for the three months ended June 30, 2002. The effective tax
rates were 36.8% and 32.8%, respectively, for the three months ended June 30,
2003 and 2002.
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CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting standards
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the related disclosure of contingent
assets and liabilities. Actual results could differ from those estimates under
different assumptions and conditions. Management believes that its critical
accounting policies and significant estimates include determining the allowance
for loan losses, the valuation of loan servicing rights, and the valuation of
foreclosed real estate.
Allowance for loan losses
The allowance for loan losses is a significant estimate that can and does change
based on management's assumptions about specific borrowers and current general
economic and business conditions, among other factors. Management reviews the
adequacy of the allowance for loan losses on at least a quarterly basis. The
evaluation by management includes consideration of past loss experience, changes
in the composition of the loan portfolio, the current condition and amount of
loans outstanding, identified problem loans and the probability of collecting
all amounts due.
The determination of the adequacy of the allowance for loan losses is based on
estimates that are particularly susceptible to significant changes in the
economic environment and market conditions. A worsening or protracted economic
decline would increase the likelihood of additional losses due to credit and
market risk and could create the need for additional loss reserves.
Loan Servicing Rights
The Company recognizes the rights to service loans as separate assets in the
consolidated balance sheet. The total cost of loans when sold is allocated
between loans and loan servicing rights based on the relative fair values of
each. Loan servicing rights are subsequently carried at the lower of the initial
carrying value, adjusted for amortization, or fair value. Loan servicing rights
are evaluated for impairment based on the fair value of those rights. Factors
included in the calculation of fair value of the loan servicing rights include
estimating the present value of future net cash flows, market loan prepayment
speeds for similar loans, discount rates, servicing costs, and other economic
factors. Servicing rights are amortized over the estimated period of net
servicing revenue. It is likely that these economic factors will change over the
life of the loan servicing rights, resulting in different valuations of the loan
servicing rights. The differing valuations will affect the carrying value of the
loan servicing rights on the consolidated balance sheet as well as the income
recorded from loan servicing in the income statement. As of June 30, 2003 and
December 31, 2002, mortgage servicing rights had carrying values of $875,000 and
$949,000, respectively.
Foreclosed Assets Held for Sale
Foreclosed assets held for sale are carried at the lower of cost or fair value
less estimated selling costs. Management estimates the fair value of the
properties based on current appraisal information. Fair value estimates are
particularly susceptible to significant changes in the
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economic environment, market conditions, and the real estate market. A worsening
or protracted economic decline would increase the likelihood of a decline in
property values and could create the need to write down the properties through
current operations.
LIQUIDITY
At June 30, 2003, the Company had outstanding commitments to originate $5.4
million in loans. In addition, open-end line of credit loans had $4.8 million
available to be drawn upon. As of June 30, 2003, the total amount of
certificates scheduled to mature in the following 12 months was $46.6 million.
The Company believes that it has adequate resources to fund all of its
commitments and that it can adjust the rate on certificates of deposit to retain
deposits in changed interest environments. If the Company requires funds beyond
its internal funding capabilities, advances from the Federal Home Loan Bank of
Chicago are available as an additional source of funds.
CAPITAL RESOURCES
The Bank is subject to capital-to-asset requirements in accordance with Federal
bank regulations. The following table summarizes the Bank's regulatory capital
requirements, versus actual capital as of June 30, 2003:
REQUIRED FOR TO BE WELL
JUNE 30, 2003 ACTUAL ADEQUATE CAPITAL CAPITALIZED
--------------------- ------------------------ ----------------------
Amount % Amount % Amount %
--------- ------- ---------- ------- --------- -------
(Dollars in thousands)
Total capital (to risk-weighted assets) $ 24,348 20.35 $ 9,572 8.0 $ 11,965 10.0
Tier 1 capital (to risk-weighted assets) 22,848 19.10 4,786 4.0 7,179 6.0
Tier 1 capital (to average assets) 22,848 11.14 8,203 4.0 10,254 5.0
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The Company's consolidated capital-to-asset requirements and actual capital as
of June 30, 2003 are summarized in the following table:
REQUIRED FOR TO BE WELL
JUNE 30, 2003 ACTUAL ADEQUATE CAPITAL CAPITALIZED
--------------------- ------------------------ ----------------------
Amount % Amount % Amount %
--------- ------- ---------- ------- --------- -------
(Dollars in thousands)
Total capital (to risk-weighted assets) $ 27,037 22.37 $ 9,669 8.0 --- N/A
Tier 1 capital (to risk-weighted assets) 25,522 21.12 4,834 4.0 --- N/A
Tier 1 capital (to average assets) 25,522 12.36 8,260 4.0 --- N/A
CURRENT ACCOUNTING ISSUES
In May 2003, the Financial Accounting Standards Board (FASB) issued Statement
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity." This Statement establishes standards for
classifying and measuring as liabilities certain financial instruments that
embody obligations of the issuer and have characteristics of both liabilities
and equity. Statement No. 150 must be applied immediately to instruments entered
into or modified after May 31, 2003 and to all other instruments that exist as
of the beginning of the third quarter of 2003. The Statement does not currently
have a material impact on the Company's consolidated financial statements.
ITEM 3. CONTROLS AND PROCEDURES
The Company carried out an evaluation as of June 30, 2003, under the supervision
and with the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls during the quarter ended
June 30, 2003.
Disclosure controls and procedures are the controls and other procedures of the
Company that are designed to ensure that the information required to be
disclosed by the Company in its reports filed or submitted under the Securities
Exchange Act of 1934, as amended (Exchange Act) is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in its reports filed under
the Exchange Act is accumulated and
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communicated to the Company's management, including the principal executive
officer and principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company and subsidiary are also subject to claims and lawsuits which arise
primarily in the ordinary course of business, such as claims to enforce liens
and claims involving the making and servicing of real property loans and other
issues. It is the opinion of management that the disposition or ultimate
determination of such possible claims or lawsuits will not have a material
adverse effect on the consolidated financial position of the Company.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
a. The Company's Annual Meeting of Shareholders was held on April 21,
2003.
b. Not applicable.
c. At such meeting, there were 1,328,110 shares of Common Stock
entitled to be voted. The shareholders approved the following
matters:
1. The election of the following individuals as Directors:
Votes For Votes Withheld Term
--------- -------------- ----
Joseph R. Schroeder 1,108,316 100,447 3 years
James D. Motley 1,180,054 28,709 3 years
Vick N. Bowyer 1,159,537 49,226 3 years
The directors whose terms continued after the meeting were Terry T.
Hutchison, John W. Welborn, David W. Dick, and Terry J. Howard.
2. The ratification of BKD, LLP as independent auditor of the
Company for the fiscal year ending December 31, 2003, as
reflected by 1,326,933 votes for, 24,490 votes against and
8,566 abstentions.
d. Not applicable.
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ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
31.1 Certification of Terry J. Howard required by Rule
13a-14(a).
31.2 Certification of Ellen M. Litteral required by Rule
13a-14(a).
32.1 Certification of Terry J. Howard, Chief Executive
Officer pursuant to Rule 13a-14(b) and Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
32.2 Certification of Ellen M. Litteral, Chief Financial
Officer pursuant to Rule 13a-14(b) and Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
(b) The Company filed a Current Report on Form 8-K on May 12, 2003
related to its first quarter 2003 earnings announcement.
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.
FIRST BANCTRUST CORPORATION
Date: August 13, 2003 /s/ Terry J. Howard
------------------------------------------
Terry J. Howard
President and Chief Executive Officer
Date: August 13, 2003 /s/ Ellen M. Litteral
------------------------------------------
Ellen M. Litteral
Treasurer
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