aµ IA - Federal Reserve Bank of Chicago

Transcription

FRY-6
OMB Number 7100-0297
Approval expires December31 , 2015
Page1 of2
Board of Governors of the Federal Reserve System
Annual Report of Holding Companies-FR Y-6
Report at the close of business as of the end of fiscal year
This Report is required by law: Section 5(c)(1 )(A) of the Bank
Holding Company Act ( 1 2 U.S.C. § 1 844 (c)(1)(A)); Section 8(a)
of the International Banking Act (12 U.S.C. § 3 1 06(a)); Sections
1 1 (a)( 1 ) , 25 and 25A of the F ederal Reserve Act ( 1 2 U.S.C.
§§ 248(a)(1), 602, and 611 a); Section 21 1 . 1 3(c) of Regulation K
(12 C.F.R. § 2 1 1 . 1 3(c)); and Section 225.5(b) ofRegulation Y (12
C.F.R. § 225.5(b)) and section 1 0(c)(2)(H) of the Home Owners'
Loan Act. Return to the appropriate Federal Reserve Bank the
original and the number of copies specified .
NOTE: The Annual Report of Holding Companies must be signed
by one director of the top-tier holding company. This individual
should also be a senior official of the top-tier holding company. In
the event that the top-tier holding company does not have an
individual who is a senior official and is also a director, the chair
man of the board must sign the report.
1,
Keith Lindauer
President
Date of Report (top-tier holding company's fiscal year-end):
December 31, 2014
Month
attest that the Annual Report of Holding Companies (including
the supporting attachments) for this report date has been pre
pared in conformance with the instructions issued by the Federal
Reserve System and are true and correct to the best of my
knowledge and belief.
With respect to information regarding individuals contained in this
report, the Reporter certifies that it has the authority to provide this
information to the Federal ReseNe. The Reporter also certifies
that it has the authority, on behalf of each individual, to consent or
object to public release of information regarding that individual.
The Federal ReseNe may assume, in the absence of a request for
confidential treatment submitted in accordance with the Board's
"Rules Regarding Availability of Information," 12 C.FR. Part 261,
that the Reporter filK!. individual consent to public release of all
details in e report concerning that individual.
�
aµI A
I Day IY
Reporte�s Legal Entity Identifier (LEI) (20-Character LEI Code)
CITBA Financial Corporation
Legal 'Title
'Title of the Holding Company Director and Off i cial
�-
of Holding Company
33 N Indiana I P. O. Box 789
(Mailing Address of the Holding Company) Street I P.O. Box
Mooresville
IN
City
State
461 58
-------
Zip Code
Physical Location (if different from mailing address)
Person to whom questions about this report should be directed:
Beth M ulbarger
VP & Controller
Name
'Ti�e
3 1 7-834-5208
Area Code I Phone Number I Extension
31 7-831 -9622
Area Code I
FAX Number
bmulbarger@citizens-banking.com
E-mail Address
ing Com?,any Director and Official
Date of Signature
-JJ-�01'5
For holding companies not registered with the SECIndicate status ofAnnual Report to Shareholders:
�
0
0
does not meet the requirements of and is not treated as a qualify
ing foreign banking organization under Section 2 1 1.23 of
Regulation K ( 1 2 C.F.R. § 2 11.23). (See page one of the general
instructions for more detail of who must file.) The Federal
Reserve may not conduct or sponsor, and an organization (or a
person) is not required to respond to, an information collection
unless it displays a currently valid OMB control number.
Reporter's Name, Street, and Mailing Address
Name of the Holding Company Director and Official
Signature of
This report form is to be filed by all top-tier bank holding compa
nies and top-tier savings and loan holding companies organized
under U.S. law, and by any foreign banking organization that
is included with the FR Y-6 report
Address (URL) for the Holding Company's web page
Does the reporter request confidential treatment for any portion of this
submission?
D Yes
Please identify the report items to which this request applies:
will be sent under separate cover
D In accordance with the instructions on pages GEN-2
is not prepared
and 3, a letter justifying the request is being provided.
For Federal Reserve Bank Use Only
RSSDID
C.I.
L_d{j 7:2t!l g
D The information for which confidential treatment is sought
is being submitted separately labeled "Confidential."
i:8J No
Public reporting burden for this informauon collection is estimated to vary from 1.3 to 101 hours per response, with an average of 5.25 hours per response, including time to gather and
maintain data in the required form and to review Instructions and complete the informaUon collection. Send comments regarding this burden esUmate or any other aspect of this collecUon of
information, including suggestions for reducing this burden to: Secretary, Board of Governors of the Federal Reserve System, 2oth and C Streets, NW, Washington, DC 20551, and to the
Office of Management and Budget, Paperwork Reduction Project (71�297), Washington, DC20503.
10/2014
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OUR MISSION
Building customer relatior)ships to maximize shareholder value.
Annual disclosure statements , as req u i red, but not reviewed by ;th.e
or relevance, are available u pon req u est at any branch office
or
FDIC for accu racy
by:·writing Citizens
Bank, 33 North Indiana Street, Mooresville, IN 46158 or calling 317-831-0110.
To our Shareholders:
We are honored to be writing our first Annual Shareholder Letter as President and Chairman of the Board
of CITBA and Citizens Bank. While our time in the new positions has been short, we believe many
positive steps have been taken to build upon an already strong company. Later in the letter we will
review some of the changes in 2014 and thoughts for 2015. Enclosed is our Company's Annual Report
listing comparable figures for 2014 and 2013. The statements presented contain consolidated results for
CITBA Financial Corporation and its wholly owned subsidiary, Citizens Bank, Mooresville.
Net income was $977,700 for 2014, compared to $2,422,700 in 2013. The decrease in net income was
due to the termination of the Citizens Bank Defined Benefit Pension Plan and the distribution of the plan
assets to the plan beneficiaries in November of 2014, and the return to normal levels for the Provision for
Loan Losses. The termination of the pension plan in the fourth quarter of 2014 was announced in a press
release on July 18, 2014. As a result of the plan termination, a pension expense of $1,541,000 before
tax, or $935,000 after income tax, was recorded in the fourth quarter. The Net Provision for Loan Losses
was $201,000 and $(272,000) for 2014 and 2013 respectfully for a year-over-year change of $473,000.
Total assets increased 4.6%, ending the year at $395,725,000 and total deposits increased by 3.9%,
ending the year at $343,492,000. Total loans, net of the allowance for loan loss, increased 13.4%,
ending at $277,622,000.
The Board was pleased to be able to return an increasing amount of capital to our shareholders in the
form of four quarterly dividends totaling $0.71 per share in 2014. This dividend amount represents an
increase of 136.7% over the amount paid in 2013. As the capital-to-asset ratio increases and the
financial performance continues to improve, the Board will continue to evaluate appropriate capital
distributions for
2015 and beyond.
As announced in October 2014, Lynn Gordon retired and Keith Lindauer was named his successor. Keith
has been with the Bank since May 2012 as the Senior Lending Officer. Additionally, Steve Mills stepped
down as Chairman of the Board, but remains a Board Member, and was succeeded by Larry Heydon who
has been on the Board of Directors since January 2012. Also in 2014, the head of Retail, Bob Kinder,
retired and a search for his replacement is being conducted.
In late 2014 we began evaluating the structure of the retail/branch operations and initiated personnel
changes in early 2015. As these changes are fully implemented, we anticipate improved efficiency and
customer service. We are also in the process of implementing changes in our backroom support areas to
improve efficiency. 2014 was also characterized by the implementation of additional regulatory initiatives,
leading to a strong compliance environment for the Bank.
_,
Looking ahead to 2015, the Board and Management will continue to work on improving the performance
of Citizens Bank by concentrating on increasing revenue from loan and deposit growth. As has been the
situation for the past several years, we will continue to review how we do business to look for ways to
improve efficiency and reduce cost. This includes maximizing our branch placement and technology
platforms strategies. 2015 will continue to have many of the same interest rate challenges that we have
experience the past several years. Loan interest rates continue to move down while deposit rates have
essentially bottomed out, compressing the Bank's Net Interest Margin. While there is hope the regulatory
burden will slow its aggressive pace of the past few years, we cannot assume this is likely. This affects
us in many ways, including the increased cost of compliance and the implied need to hold our capital
levels above regulatory minimums. While the challenges are many, so are th.e opportunities. We, the
Board of Directors, and the entire staff work every day to make Citizens Bank the best it can be and to
fulfill our mission of building customer relationships to maximize shareholder value.
Respectfully submitted,
Keith Lindauer
President
Larry Heydon
Chairman of the Board
FINANCIAL HIGHLIGHTS
AT YEAR END
Total Depo·sits
Total Assets
Loans
Total Stockholder's Equity
Book Value Per Share
·increase
!Decrease)
201.4
2013
$343,492,144
395,725,199
$330,481, 389
378,161,505
281,360; 160
248,414,455
4.64%
13.26%
38,044,071
36,228,271
5.01%
41.04
39.08
5.02%
3.94%
§§§§§§§§§§§§§§§§§§§§§§
FOR THE YEAR
Net Income
Net Income Per Share
Cash Dividends Paid
Dividends Paid Per Share
$977,747
1.05
658,154
0.71
$2,422,686 .
. 2.61
278,081
0.30
(59.64%)
(59.77%)
136.68%
136.67%
§§§§§§§§§§§§§§§§§§§§§§
FINANCIAL RATIOS
Return on Average Assets
0.25%
0.64%
(60.94%)
2.61%
6.77%.
(61,45%)
Return.on Average
Stockholder's Equity
Assets (In Millions)
450
395.7
400
350
300
250
200
0
�
�
0
N
0
N
N
�
0
N
"'
0
N
""
0
N
Deposits (In Millions)
450
400
343.5
350
300
250
200
0
0
�
0
N
N
N
�
0
N
"'
�
0
N
""
0
N
Loans (In Millions)
450
400
350
281.4
300
250
218.5
I
200
�
0
N
�
0
N
N
0
N
"'
�
0
N
""
�
D
N
Net Income (Loss) (In M i llions)
4.000
3.500
3.000
2.422
2.500
2.000
1.500
1.000
0.500
0.000
(0.500)
(1.000)
(1.500)
(2.000)
0
�
0
N
�
0
N
N
;;
N
C'l
�
0
N
..,.
�
0
N
Total Stockholders' Equity (In Millions)
45
38.0
40
35
30
25
20
15
10
5
0
0
�
0
N
�
0
N
N
0
N
Dividends Paid Per Share (In Dollars)
0.71
0.5
0
0.00
0
�
0
N
�
0
N
N
0
N
""
0
N
..,.
0
N
Return (Loss) on Average Assets (Percentage)
(0.44%)
0
�
0
N
�
0
N
N
0
N
"'
�
0
N
"""
0
N
Return (Loss) on Average S hareholders' Equity (Percentage)
6.15%
6.77%
2.50% +-----0.00%
-2.50%
-5.00%
-7.50%
(4.77% )
_,____,___-'----------------- ----------------�
0
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0
N
0
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BKD�,
CPAs
& Advisors
201 N. lilinois Street, Su,te 700// l'O. Box 44998// lndianapol<s. IN 46244.09<;8
'-' 317.383.4000 II fax 317.383.4200 II bkd,corn
Ill
l n de pende n tAuditor's Rep o rt
Board ofDirectors
Mooresville, Indiana
consolidated financial statements of CITBA Financial
We have audited the accompanying
which :o mprise the consolidated balance sheets as ofDecember 3 1,
Corporation and its subsidiary,
consolidated statern.ents of income, comprehensive income,
related
the
2014 and 20 13, and
f
cash
lows for the years th.en ended, and the related notes to the financial
stockholders' equi1.y and
statements.
cial Statements
JYfanagement's Responsibility for the Finan
preparation and fair presentation of these consolidated financial
Manarrement is responsible for the
g principles g enerally accepted in the United States of
state ents in accordance with accountin
implem�ntation and maintenarice of internal control relevant to the
America; this includes the design,
consolidated fmancial statements that are free from material
of
ion
presentat
preparation and fair
or error.
fraud
to
due
misstatement, whether
;
Auditor's Responsibility
Our responsibility is to expres� a1: opinion on thes e cons?�idated financial statements based on our
.
audits. We conducted our audits m accordance vy1th aud1tmg standards generally accepted in the
standards re�uire that we plan and perform the audit to obtain
United States of America. Those
consohdated financial statements are free from material
reasonable assurance about whether the
misstatement.
dures to obtain audit evidence about the amounts and disclosures
An audit involves performing proce
The ?r oc�dures selected depend on the auditor's judgment,
in the consolidated fma ncial statements.
k
al misstatement of the consolidated financial
ofmaten
s
includinrr the assessment ofthe ris
ror. In m aki ng those risk assessments, the auditor considers
stateme s, whether due to fraud or er
.
s
entity
'
the
nt
to
prepara tion and fair presentation of the consolidated financial
rn
releva
inte al control
procedures that are appropriate in the circumstances, but not for
statements in order to design audit
the purpose of expressing an opinio� o_n the effecti:eness of the entity's internal control.
.
Accordingly, we express no such opuuon. An audit also mcludes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by
irt
management, as well as evaluating the overall presentation o f the consolidated financial statements.
have obtained is sufficient and appropriate to provide a basis
We believe that the audit evidence we
for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the fina:ncJal position of CITBA Financial Corporation and its subsidiary as of December 3 1,
20 14 and 2013, and the results of their operations and their cash flows for the.",y�ars then ended in
accordance with accounting principles generally accepted in the United States of America.
Indianapolis, Indiaha
February 19, 2015
2
CITBA F i n a n cial Co rpo rati o n
C o n s o l i d ated Balance S h eets
December 3 1, 2 0 14 a n d 2 0 1 3
Assets
2014
Cash and due from banks
Interest-bearing demand deposits
Cash and cash equivalents
Investment securities
Available for sale
Held to maturity (fair value of $6,822, 9 1 5 and $13,598,467)
Total investment securities
Loans held for sale
Loans, net of allowance for loan losses of$3,737,722
and $3,63 1 , 1 02
Federal Home Loan Bank stock
Premises and equipment
Interest receivable
Foreclosed assets held for sale
Other assets
Total assets
$
3,08 8,005
3 ,120,3 8 9
6,208,394
2013
$
4,773,556
3 1 ,647,234
3 6,420,790
94,909,408
6,703 ,443
1 0 1 ,6 12,851
70,5 1 9,839
1 3 ,307, 135
83, 826,974
449,957
277,622,438
1 ,834,000
4,890,362
1 ,450,768
206,3 1 3
1,900,073
244,783,353
2,750,000
5,077,231
1 ,3 8 0,721
670,589
2,80 1 ,890
$ 395,725,199
$ 378, 1 6 1 ,505
$
$
L i a b i l ities and Stockh ol ders' E q u i ty
Liabilities
Deposits
Noninterest-bearing
Interest-bearing
Total deposits
BmTowings
Interest payable
Other liabilities
Total liabilities
Stockholders' Equity
Preferred stock, nonvoting $ 1 0 par value
Authorized and unissued - 35,000 shares
Common stock, $ 1 stated value
Authorized - 1,000,000 shares
Issued and outstanding - 926,977 and 926,827 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total stockholders' equity
Total liabilities and stockholders' equity
See Notes to Consolidated Financial Statements
71,45 1 ,3 68
272,040,776
343,492, 144
13,024,000
31,101
1 , 133, 8 83
357,68 1 , 128
69,067,205
26 1 ,4 1 4, 1 84
3 3 0,48 1,389
1 0,086,000
47,596
1,3 1 8,249
3 4 1 ,933,234
926,977
4,452,750
3 1 ,847,824
816,520
3 8,044,071
926,977
4,452,750
3 1 ,528,23 1
(679,687)
3 6,228,271
$ 395,725, 199
$ 378, 1 6 1 ,505
3
CITBA Finan cial Co rpo ratio n
Conso lidated Statements of I n co me
Years Ended Dece m ber 3 1, 20 1 4 a n d 20 1 3
2014
2013
Interest Income
Loans receivable
$
11,837,033
$
11,801,368
Investment securities
Taxable
Tax-exempt
Other
Dividends
Total interest income
1,878,543
342,934
40,693
125,632
14,224,835
1,553,469
568,838
79,487
106,938
14,110,100
1, 396,619
5,190
1,401,809
1,593,306
2,734
1,596,040
12,823,026
201,000
12,514,060
(272,000)
12,622,026
12,786,060
1,556,600
1,122,348
600,926
101,657
53,915
(48,850)
53,573
3,440,169
1,614,167
1,049,967
567,408
495,883
6,400
93,991
97,053
3,924,869
7,348,131
1,540,542
1,245,982
1,082,464
252,852
163,934
236,597
368,989
248,528
212,477
201,138
441,464
1,455,061
14,798,159
7,166,750
8,783
1,337,485
1,015,196
276,231
169,163
228,365
564,366
207,548
23 8,460
170,767
377,821
1,447,861
13,208,796
1,264,036
286,289
3,502,133
1,079,447
Interest Expense
Deposits
Short-term borrowings
Total interest expense
Net Interest Income
Provision (adjustment) for loan losses
Net Interest Income After Provision for Loan Losses
Other Income
Service charges on deposit accounts
Card services income
Other customer fees
Gain on loans sold
Income from foreclosed assets
Gain (loss) on other assets
Other income
·
Total other income
Other Expense
Salaries and employee benefits
Pension plan expense
Premises and equipment expenses
Data processing fees
Deposit insurance premium
Printing and office supplies
Postage and courier services
Card services expense
Marketing
Loan expense
Telephone expenses
Internet banking expense
Other exp enses
Total other expense
Income Before Income Tax
Income tax expense
Net Income
$
977,747
$
2,422,686
Net Income Per Share
$
1.05
$
2.61
·weighted-Average Shares Outstanding
926,977
926,902
,
4
CITBA Fi n a n c i al Co rporat i o n
Consolid ated Statements of Com prehensive lncollle
Years Ended Decem ber 3 1, 2014and20 1 3
2014
Net Income
$
977,747
2013
$
2,422,686
Other Comprehensive Income (Loss)
Unrealized appreciation (depreciation) on avaiiable-for-sale
securities, net oftax (benefit) of $3 17,4 1 7 and $(777,748)
for 2014 and 2013, respectively
Change·in defmed-benefit pension plan gains and
losses, net of taxes of$577,244 and $274,999
for 2014 and 2013, respectively
Comprehensive Income
$
6 1 6, 1 63
( 1,509,746)
8 80,044
1 ,496,207
419,268
(1,090,478)
2,473,954
$
1 ,332,208
5
'
CITBA F i n a n ci al Co rpo rati on
Consolidated State m e nts ofStockh o l ders' E q u ity
Years E n de d Dece m ·be r 3 1 , 20 14 arid 20 1 3
Accum ulated
.Other
Comprehensive
Additional
Common Stock
S hares
Balance, January I, 2013
926,827
Amount
$
926,827
$
Paid-in
Retained
Income
C apital
Earnings
(Loss)
4,447,650
$
Net income
$
35,168,894
2,422,686
(l,090,478)
(278,081)
150
150
5,100
926,977
926,977
4,452,750
(278,081)
5,250
31,528,231
Net income
(679,687)
36,228,271
977,747
977,747
Other comprehensive'income
1,496,207
1,496,207
(658,154)
Dividends, $0.71 per share
Balance, December 31, 2014
410,791
(1,090,478)
Dividends, $0,30 per share
Balance, December31, 2013
$
2,422,686
Other cornprehens·ive J�ss
Sale of stock
29,383,626
Total
926,977
. See Notes to Consolidated Financial Statements
$
926,977
$
4,452,750
$
31,847,824
(658,154)
$
816,520
$
38,044,071
6
CITBA Fi n a n cial Corpo rat i o n
C o n s o l i dated Statements o f Cas h F l ows
Years E n ded Dece m ber 3 1, 2 0 14 a n d 20 1 3
2014
Operating Activities
Net income
$
977,747
2013
$
2,422,686
Items not requiring (providing) cash
Provision (adjustment) for loan losses
2 0 1 ,000
(272,000)
Depreciation and amortization
368,3 1 1
406,863
Deferred income ta.'Ces
Investment securities amortization, net
(Gain) loss on other asset<;
(256,363)
708,292
486, 1 17
458, 1 5 8
48,850
(93,991)
1,533,875
Loss on curtailment and settlement of defined-benefit plan
Changes in
Interest receivable
(70,047)
Interest payable
(16,495)
(9,284)
Loans held for sale·
449,957
1 , 135,635
3,617,041
5,063,606
48,208
(I 05,9 1 1)
Other adjustments
Net cash provided by operating activities
259,039
Investing Activities
Purchases of securities available for sale
Proceeds from maturities of securities available for sale
(31,69 1 ,414)
(15,685,973)
7,760,000
10,370,000
(350,000)
Purchases of held to maturity
6,943,000
Proceeds from maturities and paydowns of securities held to maturity
3,489,250
9 1 6,000
Proceeds from sale of Federal Home Loan Bank stock
Proceeds from sale of real estate owned
Net change in loans
Purchase of premises and equipment
Proceeds from sale of premises and equipment
Net cash used in investing activities
782,2 19
1,057,864
(33,40 1,065)
( 1 1 ,739,504)
(206,493)
(332,373)
16,478
74,581
(49,23 1 ,275)
(12,766,155)
Financing Activities
Net change in
Noninterest-bearing, interest-bearing demand and savings deposits
20,833,296
18,062,404
Certificates and other time deposits
(7,822,541)
(6,350,861)
( 1,862,000)
1,439,000
64, 100,000
Proceeds from Federal Home Loan Bank advances
(59,300,000)
Paydowns of Federal Home Loan Bank advances
Cash dividends
Net cash provided by financing activities
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Additional Cash Flows Information
Interest paid
Income taxes paid
Transfers to other real estate from loans
(278,081)
15,40 1 ,838
12,877,712
(30,212,396)
5, 1 75,163
36,420,790
3 1 ,245,627
5,250
Sale of stock
Cash and Cash Equivalents, End of Year
(546,9 1 7)
$
6,208,394
$
36,420,790
$
1,418,304
$
1,605,324
346,000
503,395
360,980
460,782
7
CITBA F i n a n c i al Co rpo rat i o n
Notes to Cons o l i d ated F i n a n c i a l Statements
December 3 1 , 20 1 4 a n d 20 1 3
(Table Dollar Amounts i n Thousands)
Note 1:
Nat u re of Operati o ns a n d S u m m a ry of S i g n ificant Accounting P o l i cies
The accounting and reporting policies of CITBA Financial Corporation (Company), its wholly
owned subsidiary, Citizens Bank, Mooresville (Bank), and the Bank's wholly owned subsidiaries,
CITBA Investments, Inc. and Citizens Insurance Services, Inc., conform to accounting principles
generally accepted in the United States of America and reporting practices followed by the banking
industry. The more significant of the policies are described bel9w.
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination
of the allowance for loan losses, valuation of real estate acquired in connection with foreclosures or
in satisfaction of loans, loan servicing rights and fair values of financial instruments.
The Company is a bank holding company whose principal activity is the o'wnership and
management of the Bank. The Bank operates under a state bank charter and provides full banking
services. As a state bank, the Bank is subject to the regulation of the Department of Financial
Institutions, the State ofindiana and the Federal Deposit Insurance Corporation.
The Bank generates commercial, mortgage and consumer loans and receives deposits from
customers located primarily in Morgan County, Indiana and surrounding counties. The Bank's
loans are generally secured by specific items of collateral including real property, consumer assets
and business assets.
Consolidation
-
The consolidated financial statements include the accounts of the Company and
Bank after elimination of all material intercompany transactions.
Cash and Cash Equivalents
-
The Company considers all liquid investments with original
maturities of three months or less to be cash equivalents.
At December 31, 2014, the Company's cash accounts exceeded federally insured limits by
approximately $1,989,000, which included approximately $ 1,871,000 on deposit with the Federal
Reserve Bank and the Federal Home Loan Bank ofindianapolis as of December 31,
2014, which
are not federally insured.
8
CITBA F i n a n cial Corporati o n
Notes t o C o n s o l i d ated Financial Statements
December 3 1 , 20 14 and 2013
(Table Dollar Amo unts in Thousands)
Investment Securities - Certain debt securities th at ma nagement has the positive intent and ability
to hold to maturity are classified as "held to maturity" and recorded at amortized cost. Trading
securities are recorded at fair value with changes in fair value included in earnings. Securities not
classified as held to maturity or trading, including equity securities with readily determinable fair
values, are classified as "available for sale" and re corded at fair value, with umealized gains and
losses excluded from earnings and reported in othe r comprehensive income (loss). Purchase
premiums and discounts are recognized in interest income using the interest method over the te1ms
of the securities. Gains and losses on the sale of securities are recorded on the trade date and are
determined using the specific identification method.
For debt securities with fair value below amortiz ed cost when the Company does not intend to sell
a debt security, and it is more likely than not the Company will not have to sell the security before
recovery of its cost basis, it recognizes the credit component of an other-than-temporary
impairment of a debt security in earnings and the remaining p ortion in other comprehensive income
(loss). For held-to-maturity debt securities, the amount of an other-than-temporary impainnent
recorded in other comprehensive income (loss) for the noncredit portion of a previous other-than
temporary impairment is amortized prospectively over the remair1ing life of the security on the
basis of the timing of future estimated cash flows of the security.
Loans Held for Sale - Mortgage loans originated and intended for sale in the secondary market are
carried at the lower of cost or fair value in the aggregate. Net umealized losses, if any, are
recognized through a valuation allowance by charges to noninterest income. Gains and losses on
.
loan sales are recorded in noninterest income, and dliect loan origination costs and fees are
deferred at origination of the loan and are recognized in noninterest income upon sale of the loan.
Loans that management has the intent and ability to hold for the foreseeable future or until
maturity or payoffs are reported at their outstanding princi p a l balances adjusted for unearned
income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on
originated loans and unamortized premiums or discounts o n purchased loans.
For loans amortized at cost, interest income is accrued based on the unpaid p1incipal balance. Loan
origination fees, net of certain direct origination c osts, as well as premiums and discounts, are
deferred and amortized as a level yield adjustment over the respective term of the loan.
For all loan classes, the accrual of interest is discontinued at the time the loan is
90 days past due
unless the credit is well-secured and in process of collection. Past due status is based on
contractual terms of the loan. For all loan classe s, the entire balance of the loan is considered past
due if the minimum payment contractually required to be paid is not received by the contractual
due date. For all loan classes, loans are placed on nonaccrual or charged off at an earlier date if
collection of principal or interest is considered doubtful.
Management's general practice is to proactively charge down loans individually evaluated for
impairment to the fair value of the underlying collateral. Consistent with regulatory guidance,
charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered
uncollectible. The Company's policy is to promptly charge these loans off in the period the
uncollectible loss is reasonably determined.
9
CITBA F i n a n ci al Co rporat i o n
Notes t o Conso l i date d F i n a n c i a l Statements
December 3 1 , 2 0 14 a n d 20 1 3
For all loan portfolio segments except residential and consumer loans, the Company promptly
charges off loans, or portions thereof, when available information confirms that specific loans are
uncollectible based on information that includes, but is not limited to,
condition of the borrower,
(2) declining collateral values, and/or
(1) the deteriorating financial
(3) legal action, including
bankruptcy, that impairs the borrower's ability to adequately meet its obligations. For impaired
loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a
loss has been confinned by an updated appraisal or other appropriate valuation of the collateral.
The Company charges off residential and consumer loans, or portions thereof, when the Company
reasonably determines the amount of the loss. The Company adheres to timeframes established by
applicable regulatory guidance, which provides for the charge-down of 1-4 family first and junior
120 days past due,
180 days past due, and charge duwn to the
lien mortgages to the net realizable value, less costs to sell when the loan is
charge-off of unsecured open-end loans when the loan is
net realizable value when other secured loans are
120 days past due.
Loans at these respective
delinquency thresholds for which the Company can clearly document that the loan is both 'Nell
secured and in the process of collection, such that collection ·will occur regardless of delinquency
status, need not be charged off.
For all loan classes, all interest accrned but not collected for loans that are placed on nonaccrual or
charged off are reversed against interest income. The interest on these loans is accounted for on
the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to
accrual status when all the principal and interest amounts contractually due are brought current and
future payments are reasonably assured. Nonaccrual loans are returned to accrual status when, in
the opinion of management, the financial position of the borrower indicates there is no longer any
reasonable doubt as to the timely collection of interest or principal. The Company requires a
period of satisfactory performance of not less than six months before returning a nonaccrual loan to
accrual status.
When cash payments are received on impaired loans in each loan class, the Company records the
payment as interest income unless collection of the remaining recorded principal amount is
doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled
debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the
loan is in compliance with the modified terms, no principal reduction has been granted and the loan
has demonstrated the ability to perform in accordance with the renegotiated terms for a period of at
least six months.
Allowance for Loan Losses
-
The allowance for loan losses is established as losses are estimated
to have occurred through a provision for loan losses charged to income. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the allowance.
10
CITBA F i n a n cial Corporatio n
N otes to C o n s o l i dated F inancial State ments
Dece m b e r 3 1 , 2 0 1 4 and 201 3
(Table Dollar Amounts in Thousands)
The allowance for loan losses is evaluated on a regular basis by management and is based upon
management's periodic review of the collectibility of the loans in light of historical experience, the
nature and volume of the loan portfolio, adverse situations that may affect the bo1Tower' s ability to
repay, estimated value of any underlying collateral and prevailing economic conditions. This
evaluation is inherently subj ective as it requires estimates that are susceptible to significant revision
as more infonnation becomes available.
The allowance consists of allocated and general components. The allocated component relates to
loans that are classified as impaired. For those loans that are classified as impaired, an allowance is
established when the discounted cash flows (or collateral value or observable market price) of the
impaired loan is lower than the carrying value of that loan. The general component covers
nonimpaired loans and is based on historical charge-off experience by segment. The historical loss
experience is determined by portfolio segment and is based o n the actual loss history experienced
by the Company over the prior five years. Management believes the five year historical loss
experience methodology is appropriate in the current economic environment. Other adj ustments
(qualitative/environmental considerations) for each segment may be added to the allowance for
each loan segment after an assessment of internal or external influences on credit quality that are
not fully reflected in the historical loss or risk rating data.
A loan is considered impaired when, based on current information and events, it is probable that
the Company will be unable to collect the scheduled p ayments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in
determining impairment include payment status, collateral value and the probability of collecting
scheduled principal and interest payments when due based o n the loan's current p ayment status and
the borrower's financial condition including available sources of cash flows. Loans that experience
insignificant payment delays and p ayment shortfalls generally are not classified as impaired.
Management determines the significance of p ayment delays and payment shortfalls on a case-by
case basis, taking into consideration all of the circumstances surrounding the loan and the
borrower, including the length of the delay, the reasons fo r the delay, the borrower' s prior p ayment
record and the amount of the shortfall in relation to the principal and interest owed. Impairment is
measured on a loan-by-loan basis for nonhomogenous type loans such as commercial, nonowner
residential and construction loans by either the present value of expected future cash flows
discounted at the loan's effective interest rate, the loan's o btainable market price or the fair value
of the collateral if the loan is collateral dependent.
The fair values of collateral dependent impaired loans are based on independent appraisals of the
collateral. In general, the Company acquires an updated appraisal upon identification of
impairment and annually thereafter for commercial, commerCial real estate and multi-family loans.
Ifthe most recent appraisal is over a year old and a new appraisal is not perfmmed, due to lack of
comparable values or other reasons, the existing appraisal is utilized and discounted 20% - 40%
based on the age of the appraisal, condition of the subj ect property and overall economic
conditions. After determining the collateral value as described, the fair value is calculated based on
the dete1mined collateral value, less selling expenses. The potential for outdated appraisal values is
considered in the determination of the allowance for loan losses through analysis of various trends
and conditions including the local economy, trends in charge-offs and delinquencies, etc. and the
related qualitative adjustments assigned by the Company.
11
CITBA F i nan cial Co rporati o n
N otes to Cons o l i d ated F i n an ci a l State m e nts
December 3 1 , 2014 a n d 20 1 3
Segments of loans with similar risk characteristics are collectively evaluated for impairment based
on the segment's historical loss experience adjusted for changes in trends, conditions and other
relevant factors that affect repayment of the loans. Accordingly, the Company generally does not
separately identify individual consumer and residential loans for impainnent measurements, unless
such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.
In the course of working with borrowers, the Company may choose to restructure the contractual
terms of certain loans. In this scenario, the Company attempts to work-out an alternative payment
schedule with the borrower in order to optimize collectability of the loan. Any loans that are
modified are reviewed by the Company to identify if a troubled debt restructuring ("TDR") has
occurred, which is when, for economic or legal reasons related to a borrower's fmancial
difficulties, the Company grants a concession to the borrower that it would not otherwise consider.
Tem1s may be modified to fit the ability of the borrower to repay in line with its current financial
status, and the restructuring of the loan may include the transfer of assets from the borrower to
satisfy the debt, a modification of loan terms or a combination of the two. If such efforts by the
Company do not result in a satisfactory arrangement, the loan is referred to legal counsel, at which
time foreclosure proceedings are initiated. At any time prior to a sale of the property at
foreclosure, the Company may terminate foreclosure proceedings if the borrower is able to work
out a satisfactory payment plan.
It is the Company's policy to have any restructured loans, which are on nonaccrual status prior to
being restructured remain on nonaccrual status until six months of satisfactory borrower
performance, at which time management would consider its return to accrual status. If a loan is
accruing at the time ofrestructuring, the Company reviews the loan to determine if it is appropriate
to continue the accrual of interest on the restructured loan.
With regard to determination of the amount of the allowance for credit losses, troubled debt
restructured loans are considered to be impaired. As a result, the determination of the amount of
impaired loans for each portfolio segment within troubled debt restructurings is the same as
detailed previously.
Federal Home Loan Bank Stock is a required investment for institutions that are members of the
Federal Home Loan Bank system. The required investment in the common stock is based on a
predetermined formula carried at cost and evaluated for impaim1ent.
Premises and Equipment are carried at cost, net of accumulated depreciation. Depreciation is
computed using the straight-line and declining-balance methods based principally on the estimated
useful lives of the assets. Maintenance and repairs are expensed as incurred while major additions
and improvements are capitalized. Gains and losses on dispositions are included in current
· operations.
Foreclosed Assets Held for Sale
-
Assets acquired through, or in lieu of, loan foreclosure are held
for sale and are initially recorded at fair value, less cost to sell at the date of foreclosure,
establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by
management, and the assets are carried at the lower of carrying amount or fair value, less cost to
sell. Revenue and expenses from operations and changes in the valuation allowance are included
in net income· or expense from foreclosed assets.
12
CITBA Fin an cial Corporatio n
N otes to C o ns o l i d ated F i n ancial Statements
Decem b e r 3 1 , 2014 and 2013
Income Tax - The Company accounts for income taxes in accordance with income tax accounting
guidance (ASC 740,
Income Ta.xes).
The income tax accounting guidance results in two
components of income tax expense: current and deferred. Current income tax expense reflects
taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law
to the taxable income or excess of deductions over revenues. The Company detennines deferred
income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax
asset or liability is based on the ta,-x effects of the differences between the book and tax bases of
assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in
which they occur. Deferred income tax expense results from changes in deferred tax assets and
liabilities between periods.· Deferred tax assets are reduced by a valuation allowance if, based on
the weight of evidence available, it is more likely than not that some portion or all of a deferred tax
asset will not be realized.
Uncertain tax positions are recognized if it is more likely than not, based on the technical merits,
that the tax position will be realized or sustained upon examination. The term more-likely-than-not
means a likelihood of more than 5 0 percent; the terms examined and upon examination also include
resolution of the related appeals or litigation processes, if any. A tax position that meets the more
likely-than-not recognition threshold is initially and subsequently measured as the largest amount
of tax benefit that has a greater than 5 0 percent likelihood of being realized upon settlement with a
taxing authority that has full knowledge of all relevant information. The determination of whether
or not a tax position has met the more-likely-than-not recognition threshold considers the facts,
circumstances and information available at the reporting date and is subj ect to management's
judgment.
The Company recognizes interest and penalties on income taxes as a component of income tax
expense.
The Company files consolidated income tax returns with its subsidiaries.
Comprehensive Income - Comprehensive income consists of net income and other comprehensive
income (loss), net of applicable income taxes. Other comprehensive income (loss) includes
unrealized appreciation (depreciation) on available-for-sale securities and changes in the funded
status of the defined-benefit pension plan.
Reclassifications - Certain reclassifications have been made to the 2 0 1 3 financial statements to
conform to the 2 0 1 4 fmancial statement presentation. These reclassifications had no effect on net
income.
N ote 2 :
Restricti o ns o n Cash a n d D u e F r o m B a n ks
The Bank is required to maintain reserve funds in cash and/or on deposit with the Federal Reserve
Bank. The reserve required at December 3 1, 2 0 1 4 was $440,000.
13
Notes to C o n s o l idated F i nancial Statements
Dece m be r 3 1 , 2 0 1 4 a n d 2 0 1 3
. Note 3 :
I n vestment Secu rities
The amortized cost and approximate fair values, together with gross unrealized gains and losses, of
securities are as follows:
G ross
Gross
Amortized
U n realized
U nrealized
Fair
Cost
Gains
Losses
Value
Available-for-Sale Securities
December 3 1, 20 14
U.S. Government-sponsored agencies
·
$
57,344
State and political subdivisions
December 3 1, 2 0 1 3
U . S . Government-sponsored agencies
$
279
36,328
$
93,672
$
$
36,156
$
$
70,216
( 1 45)
57,478
(176)
37,43 1
$
(321)
$
94,909
456
$
(173)
$
36,439
740
$
$
1,558
34,060
$
1,279
1, 196
(7 19)
$
(892)
34,08 1
$
70,520
Gross
Gross
Amortized
U n realized
U n realized
Fair
Cost
Gains
Losses
Value
Held-to-l\faturity Securities
December 3 1 , 2014
December 3 1 , 2 0 1 3
$
6,703
$
120
$
$
13,307
$
298
$
(7)
$
6,823
$
13,598
The amortized cost and fair value of securities held to maturity and available for sale at
December 3 1, 2 0 14, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because issuers may have the right to call or prepay obligations with or
without call or prepayment penalties.
Available-for-Sale
Held-to-Maturity
Within one year
Amo rtized
Fair
Amortized
Fair
Cost
Value
Cost
Value
$
965
$
967
$
9,585
$
9,662
38,771
39,086
Five to ten years
34,212
34,698
Over ten years
1 1, 1 04
1 1,463
Totals
5,856
5,738
One to five years
$
6,703
$
6,823
$
93,672
$
94,909
14
CITBA F i n a n cial Co rporati o n
N otes to C o ns o l i dated F i nancial Statements
Decem ber 3 1 , 2 0 1 4 a n d 201 3
(Table Dollar Amounts in T housands)
Securities with a carrying value of $63,823,000 and $59,25 0 , 0 0 0 were pledged at December 3 1 ,
2 0 1 4 and 20 1 3 , respectively, to secure certain deposits and for other purposes as permitted or
required by law.
There ·were no sales of securities available for sale during 20 1 4 or 2 0 1 3 .
Certain investments i n debt securities have a fair value, less than their historical cost. Total fair
value of these investments at December 3 1 , 2 0 1 4 and 2 0 1 3 was $30,382,000 and $28,227, 000
respectively, which is approximately 3 0% and 34% of the B ank's available-for-sale and held-to
maturity investment portfolios. These declines primarily resulted from increases in market interest
rates and failure of certain investments to maintain consistent credit quality ratings.
S hould the impairment of any of these securities become other-than-temporary, the cost basis of the
investment will be reduced and the resulting loss recognized in either net income or accumulated
other comprehensive loss in the period the other-than-temporary impairment is identified.
The following tables show the investments ' gross unrealized losses and fair value, aggregated by
investment category and length of time that individual securities have been in a continuous
unrealized loss position at December 3 1 , 2 0 1 4 and 2 0 1 3 :
2014
Less Than 12 Months
1 2 M o n ths or More
Total
Descri ption of
Fair
U n realized
Fair
Unrealized
Fair
Unrealized
Securities
Value
Losses
Val u e
Losses
Value
Losses
U.S. Government-sponsored
agencies
$
Total temporarily
impaired
$
14,017
6,157
$
20,174
$
(72)
$
(43)
(ll5)
$
4,633
5,575
$
10,208
$
(73)
(133)
$
(206)
$
18,650
$
(145)
(176)
$
(321)
11,732
30,382
2013
Less Than 12 M o n ths
12 Months or More
Total
Description of
Fair
Unrealized
Fair
Unrealized
Fair
U nrealized
Securities
Value
Losses
Value
Losses
Value
Losses
agencies
$
Total temporarily
impaired
9,917
$
$
25,567
(173)
$
$
(759)
$
2,660
(586)
15,650
$
2,660
$
$
(140)
9,917
$
18,310
(140)
$
28,227
(173)
(726)
$
(899)
15
CITBA F i n an c i al Co rporatio n
N otes to C o ns o l i d ated F i n a n cial State m e nts
December 3 1 , 20 1 4 a n d 20 1 3
U.S. Government-Sp onsored Agencies and State and Political Subdivisions
The umealized losses on the Company ' s investments in direct obligations of U.S. Government
sponsored agencies and state and political subdivisions were caused by interest rate increases. The
contractual terms of those investments do not p ermit the issuer to settle the securities at a price less
than the amortized cost basis of the investments. Because the Company does not intend to sell the
investments and it is not more likely than not the Company will be required to sell the investments
before recovery of their amortized cost basis, which may be maturity, the Company does not
consider those investments to be other-than-temporarily impaired at December 3 1 , 20 1 4.
N o te 4 :
Loans a n d Al lowa n ce
Classes of loans at December 3 1, include:
2014
Commercial
Commercial real estate
Residential
Home equity
Consumer
Subtotal
Less: allowance for loan losses
Loans, net
2013
$
1 1, 842
82,757
29,808
20,922
136,03 1
2 8 1 ,360
(3,738)
$
1 1,095
74,4 8 1
30,054
20,564
1 12,220
248,414
(3,63 1)
$
277,622
$
244,783
Risk characteristics applicable to each segment of the loan portfolio are described as follows:
Commercial, Including Agricultural
Commercial and agricultural loans are primarily based on the identified cash flows of the borrower
and secondarily on the underlying collateral provided by the borrower. The cash flows of
b orrowers, however, may not be as expected, and the collateral securing these loans may :fluctuate
in value. Most commercial loans are s ecured by the assets being financed or other business assets,
such as accounts receivable or inventory, and may include a personal guarantee. Short-term loans
may be made on an unsecured basis. ln the case of loans secured by accounts receivable, the
availability of funds for the repayment of these loans may be substantially dependent on the ability
of the borrower to collect amounts due from its customers.
16
CITBA F i n a n ci al Corporat i o n
N otes t o Consoli dated F i n ancial Statements
Decem ber 31 , 2014 and 2013
(Table Dollar Amounts in Tho usands)
Commercial Real Estate, Including Construction
Commercial real estate Joans are viewed primarily as cash flow Joans and secondarily as loans
secured by real estate. Commercial real estate lending typically involves higher loan principal
amounts, and the repayment of these loans is generally dependent on the successful operation of
the property securing the loan or the business conducted on the property securing the loan.
Commercial real estate Joans may be more adversely affected by conditions in the real estate
markets or in the general economy. The characteristics of properties securing the Company's
commercial real estate portfolio are diverse, but with geographic location almost entirely in the
Company ' s market area. Management monitors and evaluates commercial real estate loans based
on collateral, geography and risk grade criteria. In general, the Company avoids financing single
purpose projects unless other underwriting factors are present to help mitigate risk. In addition,
construction loans are underwritten utilizing feasibility studies, independent appraisal reviews and
financial analysis of the developers and property owners. Construction loans are generally based
on estimates of costs and value associated with the complete project. These estimates may be
inaccurate. Construction loans often involve the disbursement of substantial funds with repayment
substantially dependent on the success of the ultimate proj ect. Sources of repayment for these
types of loans may be pre-committed permanent loans from approved long-term lenders, sales of
developed property or an interim loan commitment from the Company until permanent financing is
obtained. These loans are closely monitored by on-site inspections and are considered to have
higher risks than other real estate loans due to their ultimate repayment being sensitive to interest
rate changes, governmental regulation of real property, general economic conditions and the
availability of long-term financing.
Residential, Consumer and Home Equity
Residential and consumer loans consist of two segments - residential mortgage loans and consumer
loans. For residential mortgage loans that are secured by 1 -4 family residences and are generally
owner-occupied, the Company generally establishes a maximum loan-to-value ratio and requires
private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a
subordinate interest in 1-4 family residences, and consumer personal loans are secured by
consumer personal assets, such as automobiles or recreational vehicles. Some consumer personal
loans are unsecured, such as small installment loans and certain lines of credit. Repayment of these
loans is primarily dependent on the personal income of t h e borrowers, which can be impacted by
economic conditions in their market areas, such as unemployment levels. Repayment can also be
impacted by changes in property values on residential properties. Risk is mitigated by the fact that
the loans are of smaller individual amounts and s pread over a large number of borrowers.
17
CITBA Fin a n cial Co rpo ratio n
N o tes to Co nso l i d ated F i nancial Statements
Dece m b e r 3 1 , 2 0 1 4 a n d 2 0 1 3
The fo !lowing presents, by portfolio segment, the activity in the allowance for loan losses for the
years ended December 3 1 , 2 0 1 4 and 2 0 1 3 :
2014
Commercial
Commercial
84
$
Beginning Balance
Real Estate
$
12
Provision (adjustment)
Residential
$
l ,627
(248)
$
693
Loans charged off
Recoveries
Consumer
$
$
96
$
l,551
$
1,227
5
432
(9 l)
(27 1)
3,631
20 1
(362)
88
172
Ending Balance
Total
$
6 15
268
$
1,476
3,738
2013
Commercial
Real Estate
Commercial
$
Beginning Balance
Provision (adjustment)
Loans charged off
105
29
(50)
$
(809)
84
$
$
$
4,499
$
335
(272)
(401)
79
(56)
12
l ,627
Total
l,214
173
141
$
Consumer
564
$
2,616
(321)
Recoveries
Ending Balance
Residential
$
693
(82 8 )
232
$
1,227
3,631
The following tables present the balance in the allowance for loan losses and the recorded
investment in loans based on the portfolio segment and impairment method as of December 3 1 ,
2 0 1 4 and 2 0 1 3 :
2014
Commercial
Real Estate
Commercial
Residential
Consumer
Total
Allowance Baliinces:
Individually evaluated
for impairment
$
Collectively evaluated
96
for impairment
Total allowance
for loan losses
$
$
96
122
$
1,429
259
s
356
$
1 ,476
$
1,551
$
615
$
s
3,406
$
1,218
$
1,476
381
3,357
$
3,738
$
4,624
Loan Balances:
for impairment
$
Total loan
balances
$
1 1,842
49,512
79,35 1
1 1,842
for impairment
$
82,757
$
50,730
136,031
$
136,03 l
276,736
$
28 1,360
18
N otes to C o ns o l i dated F i nancial Statem ents
Decem ber 3 1 , 2 0 1 4 a n d 2013
201 3
Commercial
Commercial
Real Estate
Resid ential
Consumer
Total
Allowance Balances:
for impairment
$
$
123
$
349
$
$
472
84
for irnpainnent
344
1,504
1,227
3,159
Total allowance
for loan losses
$
84
$
1,627
$
693
$
$
4,453
$
1,365
$
1,227
$
3,631
$
5,8 1 8
Loan Balances:
for impainnent
$
70,028
1 1,095
for impairment
49,253
1 12,220
242,596
Total loan
balances
$
1 1 ,095
$
74,481
$
50,6 1 8
$
1 12,220
$
248,41 4
Internal Risk Categories
Loan grades are numbered 1 through 8. Grades 1 through 4 are considered satisfactory grades.
The grade of 5, or Watch or Special Mention, represents loans of lower quality and is considered
criticized. The grades of 6, or Substandard, and 7, or Doubtful, refer to assets that are classified.
The use and application of these grades by the Company will be uniform and shall conform to the
Company's policy.
Prime (1) Loans are of superior quality with excellent credit strength and repayment ability
providing a nominal credit risk.
Good (2) Loans are of above average credit strength and repayment ability providing only a
minimal credit risk.
Satisfactory (3) Loans are of reasonable credit strength and repayment ability providing an
average credit risk due to one or more underlying ·weaknesses.
Acceptable
(4) Loans are ofthe lowest acceptable credit strength and weakened repayment ability
providing a cautionary credit risk due to one or more underlying weaknesses.
Special Mention (5) A special mention asset has potential weaknesses that deserve management's
close attention. If left uncorrected, these potential weaknesses may result in deterioration of the
repayment prospects for the asset or in the institution's credit position at some future date. Special
mention assets are not adversely classified and do not expose an institution to sufficient risk to
warrant adverse classification. Ordinarily, special mention credits have characteristics which
corrective management action would remedy.
19
CITBA F i n a n cial Co rporat i o n
N otes t o Conso l i d ated F i n an ci a l State m e nts
Decem b e r 3 1 , 20 1 4 a n d 20 1 3
Substandard (6) Loans are inadequately protected by the current sound worth and paying capacity
of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined
weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the
distinct possib ility that the Company will sustain some loss ifthe deficiencies are not corrected.
Doubtful (7) Loans classified as doubtfol have all the weaknesses inherent in those classified
Substandard with the added characteristic that the weaknesses make collection or liquidation in
full, on the basis of current known facts, conditions and values, highly questionable and
improbable.
Loss (8) Loans classified as loss are considered uncollectible and of such little value that their
continuance as bankable assets is not warranted. This classification does not mean that the loan has
absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing
off even though partial recovery may b e affected in the future.
The following tables present the credit risk profile of the Company's loan portfolio based on rating
category and payment activity as of December 3 1 , 2 0 1 4 and 2 0 1 3 :
2014
Commercial
Residential
Real Estate
Commercial
Consumer
Home Eq uity
Total
Grade:
Pass (1-4)
$
Special mention (5)
Substandard (6)
1 1,658
$
76,937
$
27,726
166
4,141
577
18
1,679
1 ,505
$
20,859
$
63
135,906
$
273,086
39
4,923
86
3,351
Doubtful (7)
Loss (8)
Total
$
1 1,842
$
82,757
$
29,808
$
20,922
$
136,031
$
28 1,360
2013
Commercial
Residential
Real Estate
Commercial
Home Equity
Consumer
Total
Grade:
Pass (1-4)
$
Special mention (5)
Substandard (6)
9,792
$
68,217
$
27,765
183
1 ,393
558
1,120
4,871
1 ,73 1
$
20,209
$
355
1 12,038
$
238,021
59
2,193
123
8,200
Doubtful (7)
Loss (8)
Total
$
1 1,095
$
74,481
$
30,054
$
20,564
$
1 12,220
$
248,4 1 4
20
N otes t o C o n s o l i d ated F i n a n cial Statements
December 3 1 , 20 1 4 a n d 2 0 1 3
The following tables present the Company's loan portfolio aging analysis of the recorded
investment in loans as of December 3 1, 2 0 1 4 and 2 0 1 3 :
2014
Loans
Greater
Commercial
30-59 Days
60-89 Days
Than
Total
Past Due
Past Due
90 Days
Past Due
$
54
$
3
$
$
284
269
Residential
558
45
76
26
26
31
870
Consumer
Total
$
1 ,827
$
318
57
Current
s
$
97
s
Loans
l l,785
$
l l,842
Days
and
Accruing
s
82,204
82,757
603
29,205
29,808
102
20,820
20,922
26
927
135,104
136,031
13
553
Home equity
Total
> 90
2,242
s
279, 1 1 8
s
2 8 1 ,360
s
39
2013
Loans
Greater
Commercial
30-59 Days
60-89 Days
Than
Total
Past Due
Past Due
90 Days
Past Due
$
166
s
16
$
98
12
636
Residential
Home equity
70
390
Consumer
Total
$
1 ,290
s
98
s
45
$
227
Current
$
l0,868
$
Loans
Accruing
1 1 ,095
271
369
74, 1 1 2
74,481
30,054
922
1 ,570
28,484
203
203
20,361
20,564
13
473
1 1 1,747
1 1 2,220
1,454
$
2,842
s
245,572
$
Days
Total
> 90
248,4 1 4
and
$
$
The following table presents the Company's nonaccrual loans at December 3 1 , 2 0 1 4 and 2 0 1 3 :
2014
Commercial
Residential
Home equity
Consumer
Total nonaccrual Joans
2013
$
3
1 84
1 ,054
63
46
$
2
1,715
1,171
377
1 02
$
1,350
$
3 , 3 67
21
CITBA F i n a n ci al Co rpo ration
Notes t o Conso l i d ated F i nancial S tate m ents
December 3 1 , 20 1 4 a n d 20 1 3
The following tables present impaired loans for the years ended December 3 1, 2 0 1 4 and 2 0 1 3 :
2014
Average
Unpaid
··
Recorded
Principal
Specific
Balance
Balance
Allowance
1 nveStn:ient i n
I nterest
Impaired
In.come
Loans � ·
Recognized
Impaired loans v,rithout .a specific
valuation allowance;
Commercial
$
$
Residential
Home equity
$
$
$
1,797
2,104
2,036
169
416
433
419
24
23
23
4
Consumer
$
2,236
$
2,560
$
$
2,459
$
193
Impaired loans \vith a sp_ecifi�
valuation allowance;
Commercial
$
$
Residential
$
$
$
1,609
1,609
122
1,945
779
822
259
805
1 17
53
Home equity
2
Consumer
$
2,3 88
$
2,431
$
381
$
2,803
$
119
$
4,624
$
4,99 1
$
381
$
5,262
$
3 12
22
CITBA Finan cial Co rpo ratio n
Notes to Cons o li d ated F i nancial Statements
Decem ber 3 1 , 20 1 4 a n d 2013
2013
Average
Unpaid
Investment in
Interest
Recorded
Principal
Specific
Impaired
Income
Balance
Balance
Allowance
Loans
Reco g n ized
Impaired loans without a specific
valuation allowance:
$
Commercial
Residential
$
$
$
$
2,083
2,460
2,032
290
290
406
55
26
Home equity
2
Consumer
$
2,373
$
2,750
$
$
2,440
$
81
Impaired loans \\�th a specific
valuation allowance:
Residential
2,657 .
1,004
88
2,370
estate
987
88
Home equity
$
$
$
Commercial
Com1nercial real
$
123
$
2,925
486
88
309
40
103
4
Consumer
$
3,445
$
3,749
$
472
$
3,499
$
107
$
5,818
$
6,499
$
472
$
5,939
$
188
The Company had one residential loan during 2 0 1 4 that was classified as a new troubled debt
restructuring with a pre and post-modification balance of $ 1 3 ,525. The modification of this loan
included an extension on the due date of the next p ayment and term of the loan. The Comp any had
two commercial real estate loans that during 2014 were classified as new troubled debt
restructurings with a pre and post-modification balance of $ 1 64,655 and $ 1 69,736, respectively.
The modification of these loans included a change in the stated interest rate and consolidation of
multiple loans. The Company had one home equity line of credit during 2 0 1 4 that was classified as
a new troubled debt restructuring with a pre and post-modification balance of $22,966. The
modification of this loan included an extension on the due date ofthe next payment and term of the
loan. The Company had two commercial real estate loans that during 2 0 1 3 \Vere classified as new
troubled debt restructurings with a pre and post-modification balance of $ 1 9 1 ,000. The
modifications of these loans included a reduction of the· stated interest rate and modification of
p ayment terms. The Company has one commercial real estate loan that during 20 1 2 was classified
as a new troubled debt restructuring with a pre and post-modification balance of $ 1 54,000. The
modification of this loan included a reduction of the stated interest rate.
The Company has not had any troubled debt restructuring that subsequently defaulted during 2 0 1 4
and 2 0 1 3 .
23
CITBA F i n an c i al Co rpo rati o n
N o tes to C o n s o l i dated F i nancial State m e n ts
Dece m b e r 3 1 , 20 1 4 a n d 20 1 3
(Table Dollar Amou nts in Thousands)
N ote 5 :
P re m i s es and E q u i p m e n t
Major classifications o f premises and equipment, stated at cost, are as follows:
201 3
2014
Land
Buildings
Leasehold improvements
Equipment
Construction in progress
Total cost
Accumulated depreciation and amortization
Net
N ote 6 :
$
$
1,905
6,425
59
4,028
42
12,459
(7,569)
$
4,890
$
1 ,905
6,729
157
4, 1 8 8
12,979
(7,902)
5,077
D eposits
2014
N oninterest-bearing
Money market checking accounts
Money market savings accounts
S avings dep osits
Certificates and other time deposits of $ 1 00,000 or more
Other certificates and time deposits
Total deposits
2 013
$
7 1 ,451
1 06,281
48,127
52, 1 80
26,123
39,330
$
69,067
92,471
48,33 6
47,3 3 1
29, 1 69
44, 1 07
$
343,492
$
330,48 1
$
28,129
14,773
4,839
7, 1 07
7, 1 97
3,408
$
65,453
Certificates and other time deposits maturing in:
2015
20 1 6
2017
20 1 8
20 1 9
Thereafter
24
CITBA Fin a n c i al Corpo rati o n
N otes to Cons o l i dated F i n a n c i a l State m ents
Decem b e r 3 1 , 20 1 4 a n d 2 0 1 3
N ote 7 :
Loan Serv i c i n g
Mortgage loans serviced fo r others are not included in the accompanying consolidated balance
sheets. The unpaid principal balances of mortgage loans serviced for others were $76,604,000 and
$83,44 1 ,000 at December 3 1 , 2 0 1 4 and 2 0 1 3 , respectively.
The aggregate fair value of capitalized mortgage-servicing rights at December 3 1 , 2 0 1 4 and 2 0 1 3
were immaterial to the consolidated financial statements taken as a whole.
N ote 8 :
B o rrowi ngs
2014
Securities sold under repurchase agreements
Federal Home Loan Bank advances
Total borrowings
201 3
$
8,224
4,800
$
1 0,086
$
13,024
$
1 0,086
S ecurities sold under agreements to repurchase consist of obligations of the Bank to other parties.
The obligations are secured by federal agency securities, and such collateral is held in safekeeping
by another fin ancial institution. The maximum amount of outstanding agreements at any month
end during 2 0 1 4 and 2 0 1 3 totaled $ 1 6,95 1,000 and $ 12,941,000, respectively, and the daily
average of such agreements totaled $ 1 0, 8 6 8,000 and $ 1 1 ,636,000, respectively. The agreements at
December 3 1 , 2014 and 2 0 1 3 , mature daily.
Federal Home Loan Bank advances outstanding at December 3 1 , 2 0 1 4 mature on June 29, 2 0 1 5
and carry an interest rate of 0.43%. These advances are secured b y loans totaling $24,724,000 and
specific investment securities with a carrying value of $ 1 4 ,2 7 1 , 000. Advances are subject to
restrictions or penalties in the event of prepayment.
Note 9 :
I n c o m e Tax
The Company files income tax returns in the U.S. federal jurisdiction and Indiana jurisdictions.
With a few exceptions, the Company is no longer subject to U.S . federal, state and local or non
U .S. income ta,'( examinations by tax authorities for years before 20 1 1 .
25
CITBA F i n a n c i a l Corpo ratio n
Notes to C o n s o l i dated F i nancial S tateme nts
Decem b e r 3 1 , 20 1 4 a n d 20 1 3
(Tabl e Dollar Amounts in Thousands)
2014
201 3
Income tax expense (benefit)
Currently payable
Federal
533
9
$
State
$
390
( 19)
Deferred
State
Total income tax expense
Reconciliation of federal statutory to actual tax expense (benefit)
Federal statutory income tax at 34%
286
$
1 ,079
430
(121)
(26)
3
$
1 ,1 9 1
(196)
88
(4)
286
$
1 ,07 9
$
$
Tax-exempt interest
Effect of state income taxes
Other
Actual tax expense
555
153
(207)
(49)
Federal
$
A cumulative net deferred tax asset is included in other assets. The components of the asset are as
follows:
2014
2013
Assets
Allowance for loan losses
$
891
$
148
Employee benefits
Pension benefits
602
237
Atv1T credit carryover
Net operating loss
Other real estate owned
138
2,0 16
Other
Total assets
882
48
1 74
610
858
272
3
118
2,965
Liabilities
(210)
(166)
(7)
(176)
(6)
(420)
Mortgage-servicing rights
State income tax
Accretion o f investment discounts
Unrealized gain on securities available for sale
(2 11)
(9)
(1 03)
(529)
(25)
(1 5 )
(179)
(1,281)
Pension benefits
(7)
(10)
(177)
(969)
Loan fees
FHLB stock dividend
Prepaid expense
Total liabilities
$
1,047
$
1 ,684
26
CITBA F i n an c i al Co rpo ratio n
N otes to C o ns o l i dated F i nancial Statements
Decem b er 31, 2014 a n d 2013
The Company has a $602,000 alternative minimum tax credit can-yover. This credit can be used in
future years to offset regular tax if it exceeds alternative minimum tax. These credits have no
expiration date. The Company also has a state net operating loss (NOL) can-yforward of
approximately $3 , 1 56,000, which will begin to expire in 2025 .
Management believes that no valuation allowance was necessary during 2 0 1 4 or 2 0 1 3 .
N ote 1 0 :
Stock Transactions
There were no stock purchase transactions in 20 14.
The Company sold 1 5 0 shares of its common stock in 2013 for a total sales price of $5,3 0 0 . Sales
in 2 0 1 3 included 1 5 0 shares under the employee stock purchase plan.
N ote 1 1 :
E m p l oyee Ben efits
The Company had a noncontributory defined-benefit pension plan covering substantially all
employees who meet the eligibility requirements. The p lan was frozen effective December 3 1 ,
2 0 1 0 . The Company's funding policy was to make the minimum annual contribution that was
required by applicable regulations, plus such amounts as the Company may determine to be
appropriate from time to time. In 2 0 1 4, the Company elected to terminate the plan with final
settlement, including the distribution of all p lan assets, which was completed in the fourth quarter
of the 2 0 1 4. The Company recorded a loss of $ 1 ,534,000 as a result of the termination and
settlement of the plan.
The Company uses a December 3 1 measurement date for the plan. Significant balances, costs and
assumptions are:
201 4
2013
Benefit obligation
Fair value of plan assets
$
$
(5,708)
5,519
Funded status
$
$
(1 89)
Accumulated benefit obligation
$
$
5,708
Amounts recognized in the consolidated balance sheets:
Accrued benefit liability
$
$
(1 89)
27
N otes to C o n s o l idated F i n a n c i a l State m e nts
December 3 1 , 20 1 4 a n d 20 1 3
(Tab le Dollar Amounts in Thousands)
Amounts recognized in accumulated other comprehensive income (net of tax) not yet recognized as
comp onents of net periodic benefit costs consists of:
2014
Net loss
201 3
$
$
2014
Other s ignificant balances and costs are:
B enefit cost
$
Employer contribution
B enefits paid
880
2013
1,54 1
272
5,9 93
$
8
400
335
Other changes in plan assets and benefit obligations recognized in other comprehensive income
(loss):
Pension Benefits
2014
2013
Amount arising during the period
Net gain (loss)
$
(95)
$
334
Amounts reclassified as components of net periodic benefit
cost of the period
(975)
Net loss
2014
(84)
2013
Significant assumptions include:
Weighted-average assumptions used to determine benefit
obligations:
Discount rate
Rate of compensation increase
4.25%
0.00%
4.25%
0.00%
4.25%
5.7 1 %
0.00%
3.75%
7.50%
0.00%
Weighted-average assumptions used to determine benefit
costs:
Discount rate
Expected return on p !an assets
Rate of compensation increase
The Company has estimated the long-term rate of return on plan assets based primarily on
historical returns on plan assets, adjusted for changes in target portfolio allocations and recent
changes in long-term interest rates based on publicly available information.
28
CITBA F i n a n cial Co rpo rat i o n
N otes to C o ns o l i d ated F i nancial Statements
D ec e m b e r 3 1 , 2 0 1 4 a n d 2 0 1 3
(Table Doll ar Amounts in Thousands)
Plan assets were held by a bank-administered trust fund, which invested the plan assets in
accordance with the provisions of the plan agreement. The plan agreement permitted investment in
common stocks, corporate bonds and debentures, U.S. Government securities, certain insurance
contracts, real estate and other specified investments, based on certain target allocation
percentages. The plan could invest in certain derivative securities.
Asset allocation was primarily based on a strategy to provide stable earnings while still permitting
the plan to recognize potentially higher returns through a limited investment in equity securities.
The target asset allocation percentages for 2 0 13 were as follows:
Target
Allocations
Equity securities
3 5% - 65%
3 5% - 65%
0% - 25%
0% - 1 0%
D ebt securities
Real estate
Other
Plan assets were re-balanced quarterly. At December 3 1, 20 1 3 , p lan assets by categmy were as
follows:
Asset Allocations
2013
Equity securities
D ebt securities
Real estate
Other
52%
33%
1 0%
5%
Equity securities primarily included investments in large-cap and mid-cap companies primarily
located in the United States. Debt securities included mutual funds that invest in bonds. Other
types of investments included money markets.
Pension Plan Assets
Following is a description of the valuation methodologies used for p ension p lan assets measured at
fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as
well as the general classification of pension plan assets pursuant to the valuation hierarchy.
Where quoted market prices are available in an active market, plan assets are classified within
Level l of the valuation hierarchy. Level 1 plan assets include equity securities and debt securities.
If quoted market prices are not available, then fair values are estimated by using pricing models,
quoted prices of plan assets with similar characteristics or discounted cash flovvs. Level 2 p lan
assets include other securities. In certain cases where Level 1 or Level 2 inputs are not available,
p lan assets are classified within Level 3 . There are no plan assets classified as Level 3 .
29
CITBA F i n a n c i al Co rpo rati o n
N o tes to C o n s o l i dated Financial Statements
Dece m b e r 3 1 , 20 1 4 a n d 2 0 1 3
The fair values of the Company's pension p lan assets at December 3 1 , 2 0 1 3 , by asset category,
were as follows:
Fair
Value
Equity securities
Debt securities - mutual funds
$
$
201 3
Fair Value Measurements Using
Quoted Prices
in Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Assets
In puts
Inputs
(Level 1 )
(Level 2)
(Level 3)
3,307
2,212
$
5,519
$
3,307
1,930
$
5,237
$
$
282
282
$
The B ank has a retirement savings 40 l (k) plan in which substantially all employees may
participate. For 2 0 1 4 and 2 0 1 3 , the Bank matched employees ' contributions at the rate of l 00%
for the first 3% of base salary contributed by p articipants, and matched at the rate of 50% for the
next 2% of base salary contributed by participants, a total of 4%. The B ank's expense for the plan
was $ 1 67,000 for 2 0 14 and $ 1 53,000 for 2 0 1 3 .
The CITBA Financial Corporation Employee Stock Purchase Plan (Plan) enables eligible directors,
officers and employees of the Company and B ank to purchase up to 40,000 shares of Company
common stock. Pursuant to the P lan, the Company, at its discretion, may offer to sell shares
annually on March 1 and September 1 at a price equal to the fair market value as determined by the
Company's B oard of D irectors . Shares sold in any P lan year are generally limited to 500 shares
per participant and 20,000 shares in the aggregate. The Plan also provides that the Comp any may,
at its discretion, offer to repurchase such shares previously issued. This plan was terminated in
October 2 0 1 4.
N ote 1 2:
Accu m u lated O th e r Com p re h e nsive I n c o m e (Loss)
The components of accumulated other comprehensive income (loss), included in stockholders'
equity, are as follows:
201 4
Net unrealized gain on securities available for sale
Defined-benefit pension plan - net loss
$
1 ,237
$
1,237
(42 0)
Tax effect
Net-of-tax amounts
2013
$
817
$ •
3 04
(l,457)
( l , 1 53)
473
(680)
30
CITBA F i n a n ci al C o rporat i o n
N otes to Cons o l i d ated Financial Statem ents
Dece m b e r 3 1 , 20 1 4 and 20 1 3
N ote 1 3 :
Chan g es in Acc u m u lated Oth e r C o m p reh ensive Inco m e (AOC I ) by
C o m ponent
Amounts reclassified from AOCI and the affected line items in the consolidated statements of
income during the years ended December 3 1 , 2014 and 2 0 1 3 , were as follows:
Amounts Reclassified
2014
Amortization of defined-benefit pension items
Actuarial losses
$
From AOCI
(1,614)
2013
$
(140)
Components are included in the computation
of net periodic pension cost and presented
639
$
N ote 1 4 :
(975)
...,----"
"6_
$
(84)
========
in Note
11
Ta.� benefit
Net reclassified amount
Comm itments and Contingent L i a b i l ities
In the normal course of business, there are outstanding commitments and contingent liabilities,
such as commitments to extend credit and standby letters of credit, which are not included in the
accompanying consolidated financial statements. The B ank's exposure to credit loss in the event
of nonperformance by the other party to the financial instruments for commitments to extend credit
and standby letters of credit is represented by the contractual or notional amount of those
instruments . The Bank uses the same credit policies in making such commitments as it does for
instruments that are included in the consolidated balance sheets.
Financial instruments whose contract amount represents credit risk as of December 3 1 were as
follows:
201 4
Commitments to extend credit
Standby letters of credit
$
5 1,396
179
201 3
$
57,603
156
31
CITBA Fin an cial Co rpo ratio n
Notes to C o ns o l i d ated F i nancial Statem ents
Dece m b e r 3 1 , 20 1 4 a n d 20 1 3
(Table Dollar Amounts i n T housands)
Commitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The B ank evaluates each customer's credit worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon
extension of credit, is based on management's credit evaluation. Collateral held varies but may
include accounts receivable, inventory, property and equipment and income-producing commercial
properties. Standby letters of credit are conditional ·commitments issued by the B ank to guarantee
the performance of a customer to a third party.
The Company and Bank are also subj ect to claims and lawsuits which arise primarily in the
ordinary course of business. It is the opinion of management that the disposition or ultimate
resolution of such claims and lawsuits will not have a material adverse effect on the consolidate d
:financial position of the Company.
N o te 1 5 :
D iv i d en ds a n d Cap ital Restri ctions
Without prior approval, current regulations allow the B ank to pay dividends to the Company not
exceeding net profits (as defined) for the current year p lus those for the previous two years. The
B ank normally restricts dividends to a lesser amount because of the need to maintain an adequate
capital structure.
N ote 1 6 :
Reg u l atory Cap ital
The Bank is subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken, could have a direct
material effect on the B ank' s consolidated financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Bank must meet specific capital
. guidelines that involve quantitative measures of the B ank's assets, liabilities and certain off
balance-sheet items as calculated under regulatory accounting practices. The B ank ' s capital
amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors. Furthermore, the Bank's regulators could require
adjustments to regulatory capital not reflected in these consolidated :financial statements.
32
CITBA Fin a n cial Corpo rati o n
N o tes to C o n s o l i d ated F i nancial Statements
December 3 1 , 20 1 4 a n d 20 1 3
Quantitative measures established by regulation to ensure capital adequacy require the B ank to
maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as
defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital to average
assets (as defined). Management believes, as of December 3 1 , 2 0 1 4 and 2 0 1 3 , that the B ank meets
all capital adequacy requirements to which it is subj ect
As of December 3 1 , 20 14, the most recent notification from the regulators categorized the Bank as
well capitalized under the regulatory framework fo r prompt corrective action. To be categorized as
well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I
leverage ratios as set forth in the table. There are no conditions or events since that notification
that management believes have changed the Bank's category.
capital amounts and ratios are as follows:
The B ank's actual and required
20 1 4
Total capital (to risk-weighted
assets)
$
Minimum
Required for
To B e Well
Adeq uate Capital
Actual
Amount
Minimum
Amount
Ratio
$
Capitalized
Ratio
Ratio
Amount
$
25,214
8.0%
1 1 .8
12,607
4.0
18,9 1 1
6.0
9.5
15,670
4.0
1 9, 5 8 8
5.0
40,885
13.0%
3 7, 1 47
37,147
3 1,5 1 8
10.0%
Tier I capital (to risk-weighted
assets)
Tier I capital (to average assets)
201 3
assets)
$
Minimum
Required for
To B e Well
Adequate Capital
Amount
Ratio
Actual
Ratio
Amount
Total capital (to risk-weighted
Minimum
$
Capitalized
Amount
Ratio
$
22,430
8.0%
13.1
1 1,215
4.0
16,823
6.0
9.8
15, 1 1 9
4.0
1 8,899
5.0
40,362
14.4%
36,856
36,856
28,038
1 0.0%
Tier I capital (to risk-weighted
assets)
Tier I capital (to average assets)
33
CITBA F i n an c i al Co rporati o n
Notes to Cons o l i d ated F i n an cial Statements
Decem b e r 3 1 , 20 1 4 a n d 20 1 3
N ote 1 7 :
D isclosures A b o u t F a i r Val ues o f F i n a n c i a l I nstru m ents
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Fair value measurements
must maximize the use of observable inputs and minimize the use of unobservable inputs. There is
a hierarchy of three levels of inputs that may be used to measure fair value:
Quoted prices in active markets for identical assets or liabilities
Level 1
Observable inputs other than Level 1 prices, such as quoted prices for similar assets
Level 2
or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities
Unobservable inputs supported by little or no market activity and are significant to
Level 3
the fair value of the assets or liabilities
Recurring Measurements
The following tables present the fair value measurements of assets recognized in the accompanying
consolidated balance sheets measured at fair value on a recurring basis and the level within the fair
value hierarchy in which the fair value measurements fall at December 3 1, 2 0 1 4 and 2 0 1 3 :
Fair
Val u e
agencies
$
57,478
201 4
Fair Val u e Measurements Using
Quoted Prices
in Active
Sig nificant
Other
M arkets for
S i g n ificant
Observable
Identical
U n o bservable
Inputs
Assets
Inputs
(Level 1 )
(Level 2)
(Level 3)
$
$
57,478
$
State and political
37,43 1
37,43 1
subdivisions
$
94,909
$
$
94,909
$
34
CITBA Fi n a n c i al Co rporat i o n
Notes t o C o n s o l i dated F i nancial State m e nts
D ec e m b e r 3 1 , 20 1 4 a n d 2 0 1 3
Fair
Val u e
agencies
State and political
subdivisions
$
3 6,439
201 3
Fair Valu e Measurements Using
Quoted Prices
in Active
Significant
Markets for
Other
S i g n ificant
Identical
Observable
U n o bservable
Assets
Inputs
I n p uts
{Level 1 )
{Level 2)
{Level 3)
$
$
70,520
$
34, 0 8 1
34,0 8 1
$
36,439
$
$
70,520
$
Following is a description of the valuation methodologies and inputs used for assets measured at
fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as
well as the general classification of such assets pursuant to the valuation hierarchy. There have
been no significant changes in the valuation techniques during the year ended December 3 1 , 2 0 1 4.
Available-for-Sale Securities
-
Where quoted market prices are available in an active market,
securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not
available, then fair values are estimated by using pricing models, quoted prices of securities with
similar characteristics or discounted cash flows. Matrix pricing is a mathematical technique widely
used in the banking industry to value investment securities without relying exclusively on quoted
prices for specific investment securities but rather relying on the investment securities' relationship
to other benchmark quoted investment securities. Level 2 securities include U . S . Government
agency securities and obligations of state and political subdivisions. In certain cases where Level 1
or Level 2 inputs are not available, securities are classified ·within Level 3 of the hierarchy.
35
CITBA F i n a n ci al Co rpo rat i o n
N o tes t o C o n s o l i d ated F i n a n c ial State m e nts
Dece m b e r 3 1 , 20 1 4 a n d 20 1 3
(Tab le Dollar Amou nts in Thousands)
Nonrecurring Measurements
The following table presents the fair value measurement of assets measured at fair value on a
nonrecurring basis and the level within the fair value hierarchy in which the fair value
measurements fall at December 3 1 , 2 0 1 4 and 20 1 3 :
Fair
Val u e
Fair Value Measurements Using
Quoted Prices
in Active
S i g n ificant
Other
Markets for
S i g n ificant
Identical
Observable
U nobservable
Assets
Inputs
In puts
{Level 2)
(Level 1 )
(Level 3)
December 3 1, 2014
Imp aired loans
$
1 ,477
$
$
$
1 ,477
December 3 1 , 2013
Impaired loans
$
2,973
$
$
$
2,973
Following is a description of the valuation methodologies and inputs used for assets measured at
fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets,
as well as the general classification of such assets pursuant to the valuation hierarchy. For assets
classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair
value is described below.
Co/lateral-Dependent Impaired Loans, Net of ALLL
The estimated fair value of collateral- dependent impaired loans is based on the appraised fair value
of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified
within Level 3 ofthe fair value hierarchy.
The Company considers the appraisal or evaluation as the starting point for determining fair value
and then considers other factors and events in the environment that may affect the fair value.
Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is
determined to be collateral-dependent and subsequently as deemed necessary by the Controller's
office. Appraisals are reviewed for accuracy and consistency by the Controller's office.
Appraisers are selected from the list of approved appraisers maintained by management. The
appraised values are reduced by discounts to consider lack of marketability and estimated cost to
sell ifrepayment or satisfaction of the loan is dependent on the sale of the collateral. These
discounts and estimates are developed by the Controller's office by comparison to historical
results.
36
CITBA F i n a n c i al Corpo rat i o n
N otes to C o n s o l i d ated F i na n cial Statements
December 3 1 , 20 1 4 a n d 2 0 1 3
(Table Dol lar Amounts in Thousands)
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in recurring
and nomecurring Level 3 fair value measurements other than goodwill.
Range
Fair Value
D ecember 31, 2014
Collateral-dependent
$
1,477
Collateral-dependent
Market comparable
properties
impaired loans
December 3 1 , 2013
Valuation
Technique
$
2,973
Market comparable
properties
impaired loans
U n o bservable
(Wei g hted-
Inputs
Average)
Marketability discount
10% - 1 5% ( 12%)
and selling costs
Marketability discount
10% - 15% (12%)
and selling costs
Following is a description of the valuation methodologies used to estimate fair value for assets and
liabilities of all other financial instrnments in the accompany consolidated balance sheets at
amounts other than fair value.
Cash and Cash Equivalents - The fair value of cash and cash equivalents approximates carrying
value.
Held-to-Maturity Securities
-
Fair value is based on quoted market prices, if available. If a
quoted market price is not available, fair value is estimated using quoted market prices for similar
securities.
Loans Held for Sale - Carrying amount approximates fair value.
Loans - For both short-term loans and variable-rate loans that reprice :frequently and with no
significant change in credit risk, fair values are based on carrying values. The fair value for other
fixed-rate loans is estimated using discounted cash flow analyses and interest rates currently being
offered for loans with similar terms to borrowers of similar credit quality.
Federal Home Loan Bank Stock - The fair value of Federal Home Loan B ank stock is based on
the price at vvhich it may be resold to the Federal Home Loan Bank.
Interest Receivable/Payable - The fair values of interest receivable/payable approximate carrying
values.
37
CITBA Fin a n cial Co rpo ration
N otes to Cons o l i d ated F i n an cial Statements
Decem ber 3 1 , 20 1 4 a ri d 20 1 3
Deposits - The fair values of noninterest-bearing, interest-bearing demand and savings accounts are
equal to the amount p ayable on demand at the balance sheet date. Fair values for fixed-rate
certificates and time deposits are estimated using a discounted cash flow calculation that applies
interest rates currently being offered on certificates to a schedule of aggregated expected monthly
maturities on such time deposits.
Federal Home Loan Bank Advances
-
Rates currently available to the Company for debt with
similar terms and remaining maturities are used to estimate the fair value of existing debt.
S hort-Term Borrowings - The carrying amounts approximate fair value.
The estimated fair values of the Company's financial instruments are as folluws:
20 1 4
Assets
Cash and cash equivalents
Securities held to maturity
$
2013
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
6,208
6,703
$
6,208
6,823
Loans held for sale
$
36,421
13,307
$
36,421
13,598
450
450
277,622
2 8 1,373
244,783
248,663
Federal Home Loan Bank stock
1 , 834
1,834
2,750
2,750
Interest receivable
1,451
1,45 1
1,3 8 1
1 ,3 8 1
330,481
3 3 1,906
Loans, net
Liabilities
343,492
3 44,000
Federal Home Loan Bank advances
4, 800
4,800
8,224
8,224
10,086
1 0,086
31
31
48
48
Deposits
Interest payable
38
CITBA Finan cial Corporat i o n
N otes to C o n s o l i dated F i n a n c ial State m e n ts
Dece m b e r 3 1 , 20 1 4 a n d 20 1 3
N o te 1 8 :
Cond ensed Fi nancial Info rmati on (Parent C o m p any O n ly)
Presented below is condensed financial infonnation as to financial position, results of operations
and cash flows of the Company:
C o n d ensed Balance S h eets
D ecember 3 1 ,
2014
201 3
Assets
$
8
37,964
1 86
$
22
3 6, 1 76
32
Total assets
$
38,1 58
$
3 6,230
accounts payable
$
1 14
$
2
Cash
Investment in connnon stock of subsidiary
Other
Liabilities
-
Stockholders' Equity
Total liabilities and stockholders' equity
3 8,044
$
3 8, 1 5 8
36,228
$
3 6,230
Condensed Statements of I n come and C o m p re h e n s ive I n come
Years Ended December 3 1 ,
201 3
201 4
Income
Dividends from subsidiary
Other income
Total income
$
690
4
694
Expenses
Income before equity in undistributed income of subsidiary
Equity in undistributed income of subsidiary
$
225
7
232
8
6
686
292
226
2,197
Net Income
$
978
$
2,423
Comprehensive Income
$
2,474
$
1,332
\
39
C ITBA F i n a n c i al Co rporat i o n
Notes to C o ns o l i d ated F i nancial Statements
Dece m b e r 3 1 , 2 0 1 4 a n d 20 1 3
C o nd e nsed Statements of-Cas h Fl ows .
Years Ended December 3 1 ,
2014 . . .
201 3
Operating Activities
Net income ·
$
Items not providing cash
Net cash provided by operating activities
978
(445)
533
$
2,423
(2, 197)
226
Financing Activities
Sale of stock
Cash dividends
Net cash used in financing activities
Net Change in Cash
Cash at Beginning of Year
Cash at End of Year
N ote 1 9 :
$
(547 )
(547)
5
(278)
(273)
(1 4)
(47)
22
69
8
$
22
S u b s e q u e n t Events
Subsequent events have been evaluated through the date of the Independent Auditor's Report,
which is the date the consolidated financial statements were available to be issued.
40
CITBA FINAN CIAL C.O R P O RATI O N
D i recto rs
J effrey A. B a n n i n g
C h risto pher J . Branson
Larry R. H ey d o n
Thomas A. H u b bard
Wi l l iam R. " C h i p " Keller
Keith A. Lindauer
Stephen T. M ills
Calvin A. Pers o h n
J o n E . Williams
O ffi cers
Larry R. Heyd o n , C h a i rman
Jon E. Wi l l iams, Vice C h airman
Keith A. Lind auer, P resid ent
Wi l l iam R. "Ch ip" Kel ler, S ecretary
J o h n Fleener, Treasurer
..
Tra n sfer A� ent
American Stock Transfer & Trust Company, LLC> J
6201 15th Ave n u e
Brookly n , N Y 1 1 2 1 9
(800) 937-5449
www . a mstock.com
_ _, ,
..
JEFFREY A. BANNING
D i rector s i n ce 2 0 1 O ; C hai r of the Com pensation C o m mittee; Member of the Asset/Li a b i l ity
M anagement C o m mittee
J eff B a n ning founded Banning Engineering 20 years ago and serves as its President. He is
reg u la rly involved in economic development, parks and recreation, m unicipal and p rivate
infrastructure and site desi g n projects. H e serves on the Boards of the I ndiana Economic
Development Association (!EDA) , the Plainfield Chamber and the Parks Foundation of
H en d ricks County, and holds mem berships with the Hendricks, Johnson, Knox, and Morg a n
County EDC's. Jeff i s highly involved in running , promoting the P ark2Park Relay a n d facilitating
a training program for the M i ni Marathon. Jeff graduated from the U niversity of Evansville with a
B . S . degree i n Civil E n g ineering . He is married with four children and lives in Mooresville.
CHRISTOPHER J. BRANSON
D i rector s i n ce 2 0 1 5 ; Member of the Audit an d Corporate Governance Committees
C h ris B ranson began working in the funeral ind ustry at Leppert Mortuary in I ndianapolis when
he was 17 and rose to the position of g eneral manager. H e resigned from Leppert Mortuary in
2005 and p u rchased Carlisle & Son Funeral C hapel i n 2007, establishing the county's only
onsite crematory. The company, rebranded as Carlisle-Branson Funeral Service & Crem atory
i n 20 1 0, celebrates its 1 201h a nniversary this year. Chris is the Board President of the
C o m m unity Fo u ndation of Morg a n County, Vice President of the M ooresville Chamber of
Comm erce and serves o n the Board of the M ooresville Senior Center. H e is a member of the
Mooresville Kiwanis Cl u b , the Mooresville Lions Club, Mooresville M asonic Lodge #78 and the
St. Thomas M ore Knig hts of Columbus. H e is also actively i nvolved with Saints Francis a nd
Clare School in Greenwood. Professionally, Chris is an active member of Selected I ndependent
Funera l Homes and a mem ber of the I ndiana Funeral Directors Association and the National
Funeral Directors Association. H e earned a B . S. B.A. degree in Entrepreneurial Studies from
Xavier U n iversity and graduated from Worsham College of Mortuary Science in Chicag o. Chris
is married with two children and lives in Mooresville.
LARRY R. HEYDON
D i rector s i n c e 2 0 1 2; C h ai rman of the Board; C h a i r of t h e Executive Committee; M e m b e r
of t h e Asset/Liabil i ty M anagement C o m mittee
Larry Heydon serves as President/CEO of Johnson Mem orial Health and previously served as
Chief Financial Officer of the hospital. He also is the former Chief Executive of St. Francis
Hos pital, M ooresville. He began his career at Ernst and Young and developed a passion for the
banking industry thro u g h his assignm ent on many bank consulting and audit engagements. He
serves as Past C h airperson of the Johnson Cou nty Development Corporation, Co-Chairperson
of Aspire Johnson County and Secretary/Treasurer of the J M H Foundation and previously
s.erved o n the Morgan Cou nty Economic Development Corporation Executive Board. Larry
holds a B . S . d e gree in Accounting from Butler University and an M . B.A. degree from Indiana
Wesleyan. H e also holds a n inactive license as a certified p ublic accountant (CPA). He is
m a rried with two children and lives i n Greenwood.
THOMAS A. HUBBARD
D i rector s i n ce 1 99 8 ; Chair of the Corporate Governance C o m mittee; M ember of t h e Loan
& I nvestment Committee
Tom H u bb ard raises both soybeans and corn on his family farm, where he serves as President
of Windridge Farms, I n c. He also works as the Central I ndiana Manager of S u n rise Energy
Systems. He formerly worked with his father at the H u b b ard Grain & Feed Mill for many years,
and eventually took over as the fourth g eneration owner of the company. He attended P u rd u e
U n iversity, completing t h e agriculture s hort course program i n 1 986. Tom i s married with on e
son and lives in Monrovia.
WILLIAM R. "CHIP" KELLER
D i rector s i n ce 20 1 O; Secretary of the Board; C h a i r of t h e Audit Committee; M em b e r of t h e
Executive Committee
C h i p Keller is President of Keller Office S upply in M artinsville. He previously worked at O live,
LLP (now B KD , LLP) CPA firm in I ndianapolis, where he specialized in financial institution a udit
and consulting work. He is very active in his local com m u n ity, where he serves as President of
the M artinsville Redevel opment Commission and the Morgan County Economic Development
Corporation. Chip holds a B. S. degree in Accounting from Butler U niversity and an inactive
I ndiana CPA license. He is married with two children and lives in M artinsville.
KEITH A. LINDAUER
D i rector s i n ce 2 0 1 4; President; C h a i r of t h e Loan & I nvestment Committee; M e m b e r of
t h e AsseULiabil ity M anagement and Executive C o m mittees
Keith Lindauer was n amed Pres ident and C E O of Citizens B a n k and C ITBA F i n a n cial
C o rp o rati o n o n Octob e r 22, 20 1 4 . With 28 years of b a n ki n g exp erience i n Central I nd i a n a ,
h e b e g a n h is career with The N atio n a l B a n k o f Greenwood, w here h e h e l d a v a riety of
positio n s i n t h e co n s u m e r a n d c o m mercial areas. H e also worked for First C o m m u n ity B a n k
a n d Trust, where h e w a s a n Executive Vice President a n d S enior Loan Officer. I n 2003, h e
tra nsitioned t o M a i n S o u rce B a n k as S enior Vice President and D irector o f C o m m e rcial
Len d i n g , eventua l ly being p ro m oted to Senior C o m m e rcial B anker. For the past two y e a rs ,
h e served as Senior Vice President, C h i ef Lending Officer for Citizens B a n k. H e i s a m e mber
of the Indiana Bankers Association C o m m ercial Lend i n g Committee, the Kn i g hts of
C o lu mbu s and the M org a n Co u nty E c onom ic Develo p m e n t Corporation. Keith g ra d u ated
from P urd u e U n iversity with a B . S . degree in Agriculture Finance and earned his M BA from
the U n iversity of I n d i a n a polis. Keith is m arried with two children and lives in F ra n k l i n .
S TEPHEN T. MILLS
D irector s i nce 1 99 6 ; Immed iate Past C h airman of the Board; M ember of the
Asset/Li a b i l ity M anagement, Corporate Governance a n d Loan & I nvestment C o m mittees
Steve M i l l s is a m a naging partner of Mil l s Family Farms, LLC with crops and cattle in M o rg an
and Marion counties. Steve taug ht and coached at M ooresville H i g h School. He has also
served a s Board President of Midland Farmers Co-op,' Board Vice President and Chairman of
the Corporate Governance Committee of Co-Alliance LLP Farmers Co-op, and was a member
and C h airman of Western Yearly Meeting Financial Trustees. H e is currently Trustee and
Assistant Treasurer of West Newton Friends M eeting and serves o n the Earlham College B oard
of Trustees. Steve grad u ated from I ndiana U niversity and Earlham College. He is m a rried with
two children and three g randchildren and lives in West N ewton .
CAL VIN A . PERSOHN
Director s i n ce 2004; Member of the Audit a n d Compensati o n Committees
Cal Pers o h n is a retired partner of BKD, LLP (thro u g h merger and previously Olive, LLP and
Geo. S . Olive & C o .) , a M idwest regio nal certified public acco u nting firm. The majority of his 34
year career with B KD was spent serving the financial services industry and g aining an
u n derstanding o f operatin g and reporting issues facing the industry. H e is currently registered
as a C PA on inactive status and a reti red mem ber of the American Institute of Certified P u blic
Accountants. Cal holds a B.S. degree i n Accounting from I ndiana State U niversity. He is
married with two children and six g randchil dren and lives in Greenwood.
JON E. WILLIAMS
D i rector s i n ce 2006; Vice C h a i rman of t h e Board ; M em b er of the Compensation a n d
Executive C o m mittees
Jon Wil l iams is a lawyer and partner with Williams B arrett & Wilkowski, practicing for 39 years in
J o h n s o n and the s u rrounding counties. Alth o u g h the firm specializes i n representing banks,
real estate, p u rchasing and selling businesses and assisting corporations in formatio n and
g rowt h , Jon's personal practice is centered o n estate planning, probate administrati o n , and
elder law. J o n holds a B.A. degree from S outhern College (Tennessee) , an M.A. i n U S Hi story
from the U niversity of Missouri and a J . D . degree from I ndiana U n iversity School of Law ( M a g n a
Cu m Laude). J o n is ma rried with three g rown children a n d lives i n Bargersville.
CITIZE N S B A N K
D i rectors
Larry R. Heydon, Chairman
Jon E. Williams, Vice Chairman
William R. "Chip" Keller, Secretary
Thomas A. Hubbard
Keith A. Lindauer
J effrey A. Banning
Christopher J. Branson
Stephen T. Mills
Calvin A. Persohn
Officers & Staff
Keith Lindauer, President & CEO
John Fleener, Sr. Vice President, Chief Financial Officer
Richard Morris, Sr. Vice President, Chief Credit Officer &
Sr. Lending Officer
Pennie Stancombe, Sr. Vice President, Human
Resources Director
Sondra Cooper, Vice P resident & Collection Manager
James Ellis, Vice P resident, Sr. Consumer Lender
Shelley Ferrand, Vice P resident, Compliance
Donald Goeb, Vice President, Commercial Loan Officer
Michael Hein, Vice President, Consumer Loan Officer
Stephen Kaiser, Vice President, Commercial Loan Officer
Beth Mulbarger, Vice President, Controller & Cashier
Cory Palmer, Vice President, Technology Officer
Michael Polley, Vice President, Operations
John Purdie, Vice P resident, Commercial Loan Officer
Tim Sichting, Vice President, Sr. Consumer Loan Officer
Randy Stephens, Vice President, Mortgage Lending
Sara Crone, Assistant Vice President, Branch
Operations & S ecurity Officer
Thomas Eineman, Assistant Vice P resident, Assistant
Controller & Assistant Cashier
Kimberly Harmon, Assistant Vice P resident, Branch and
Retail Operations Manager
Jacqueline Hoff, Assistant Vice P resident, Loan Officer
Cheryl Samuels, Assistant Vice P resident, Human
Resources
Vanessa Scott, Assistant Vice P resident & Consumer
Loan Officer
Sharon Saucerman, Assistant Cashier & Branch
Manager
Rachel Barnhart, Branch Manager
Tonya Dagostino, B ranch Manager
Lauren Harmon, Branch Manager
PJ Neace, Branch Manager
P atricia Wilson, B ranch Manager
Bank Family
Bonnie Almon
Angela Amos
Sharon Barnes
Holly Erickson
Tiffani Farmer
Pamela Ferguson
Shelley Himes
Floyd Hubbard
Kristin I rvine
Norita Palmore
Christina Pemberton
Priscilla P heifer
Vicki Seidel
Kia Short
Diane Sims
Alexandrea Barry
Dawn Best
Millie Bowen
Phyllis B rightwell
Robin Brinkley
Taylor Brooks
Tammy Cash
Judy Cummings
Pam Davis
Ramona Davis
Vickie D avis
Debbie Defur
Tina Dunbar
Cathy Earles
Barbara Fines
Jim Fitch
Jennifer Franklin
Diana Gaskin
Becky Gibbs
Teresa Goss
Liana Greene
Debra Hacker
Carla Keen
Tina Kinnett
Christy Kirk
Lori Kreamer
Tiffiny Lawrence
Alicia Mason
Kayce Mattingly
Autumn McWhirter
Sandra Miracle
Brooke Morris
Megan Mursener
Nina Mynatt
Carolyn Polson
Brian Popenfoose
Jacelyn Pridemore
Terri Priest
Ashley Rhea
Kellie Rhodes
Amanda Riddle
Jill .Ruberson
Lana Rushing
Pam Salmeron
Johnna Saucerman
Jeannie Schaffer
Fred Schoon
Jessica Scott
Shawn Smalling
Kim Squires
Mary Stahl
Brent Stanley
Kyle Stierwalt
Brenda Tapp
Amanda Thompson
Carl Vendeventer
Vicki Vanzant
Mary Weber
Alyssa Whaley
Julie Wolfe
Mari Hackett
Erica Haines
Lacey Halterman
Dan Hames
Emily Hammer
Diana Harris
Terri Newman
Patti Okerson
Mariah Page
Andrea Woods
Chris Zike
C IT B A FI NANCIAL CORP O RATI O N A N D CITIZE N S BANK
C O R P O RATE G OVE RNAN C E P O L I CY
The Board of D irectors has estab lished the following g u id elines that it follows in
co rporate g overnance:
I.
Role of the Board
Th e D i rectors are elected by the share h olders to oversee the actions and results
of the Company's management. Each Director owes a d uty of loyalty to the
C o m p any and is expected to act i n th e best interest of the shareholders as a
whole. The respo ns ib ilities of the D i rectors inclu de:
>
providing general oversig ht of the b u s i n ess;
>
a p p roving co rpo rate strategy and maj o r management i nitiatives ;
>
p rovid i n g overs ig ht of legal and ethical con d u ct;
>
selecting and compe nsati ng the C h i ef Executive Officer and compe nsati ng
>
>
>
other senior officers;
n o minating , co mpensati n g , and evaluating D i recto rs;
evaluating Board processes and performance;
ap p o inting , compensating and p rovi d i n g oversight of the Company's
i n d epend ent a u d itors.
II.
I n d e p e n d e nce of D i rectors
To i ncrease the effectiveness of the Board of D i rectors in carrying out their
responsib ilities, a majo rity of the Board Members will be i ndependent D i rectors.
Criteria to Q u a l i fy as an I n d ep e n d e n t D i recto r
A D i rector is co nsidered i n dependent if h e o r s h e is not an emp loyee or has not
been a n emp loyee for at least five years, has n o material relationship with the
Com pany as a s ubstantial s u pplier of or customer for g oods or services, a n d
do es n o t obtain co mpensation from t h e Company other th an Director's
co m pensation a n d d ividends.
Co nfl icts of I nterest
Occas ionally a D i rector's b u siness or p ersonal relationsh ips may g ive rise to a
material interest that conflicts , or ap pears to conflict, with the i nterests of the
C o mpany. The B oard will take a p p ro p riate steps to ens u re that all Directors
voting o n an iss u e do not possess conflicts of interest.
In ap p rop riate cases, the
affected D i recto r will b e excused from d iscussions on the iss u e .
To avoi d any ap p earance of a conflict, Board decisions o n certa in matters of
corpo rate g overnance are made solely by the i n d epend ent Directors. These
i n c l u d e Director n o m i nations and the se lecti o n , evaluati o n , compensation and
removal of the Chief Executive Officer.
Ill.
D i rector Ten u re
The corpo rate governance g u i d e l i n es establish the req u i rement that Directors will
resig n from the Board following their 7oth b i rthday at the end of their el ected
th ree-year term.
IV.
Res p o n s i b i lities a n d F u n cti o n i n g of the B oard
A.
Eva l u ation of C h i ef Executive O ffi cer
The Chairperson of the Executive Co mm ittee leads the i ndependent
Directors a n n ual ly i n assessi n g the performance of the C h ief Executive
Officer. The resu lts of this review are d iscussed with the C h ief Executive
Officer and considered by the Executive Committee in estab l i s h i n g the
CEO's compensation for the next year.
8.
Management S u ccess i o n
The Company has p lans i n p lace that i n c l u d e s u ccess i o n p l a n n i n g for the
position of C h ief Executive Officer and the Bo ard of D i rectors. T h ese
plans are reviewed ann u al ly by the B oard .
C.
Executive Sess i o n s of D i recto rs
At least twice a year, and at other times as they see fit, the n o n-emp loyee
D i rectors wi ll meet in Executive Session.
D.
Board C o m m ittees
The Chairperson of the Board of D irectors a n n u ally appoi nts m e m b ers to
the six comm ittees of the Board a n d names the comm ittee chairpers o n s ,
s u bject to Board approval. Co mmittee members h i p selection is b ased
upon the talents, interests and avail a b i l ity of the members. The B o a rd
estab l ishes committees u n d e r the corpo rate g overnance g u id e l i n es listed
above. The cu rrent comm ittees are shown below:
>
.
>
>
>
Asset/Liab ility Managem ent Committee
Audit Comm ittee
Compensation Committee
Corporate Governance Committee
> Loan and I n vestment Comm ittee
>
Executive Comm ittee
Form FR Y-6
CITBA Financial Corporation.
Mooresville, Indiana
Fiscal Year Ending December 3 1 , 201 4
Report Item
1:
The B H C is not registered with the SEC. Three copies of the annual
report are included .
2a:
See Attached
2b:
Domestic Branch Listing was e-mailed to Branch Review@ch i.frd . org on
3.
See attached
4.
See attached
Ma rch 6 , 20 1 5 . A copy of the report is attached.
Form FR Y-6
Citba Financial Corp.
Mooresville, I ndiana
Fiscal Year Ending December 31 , 2014
Item 2a: Organizational Chart
Mooresville , I N U . S.A.
Incorporated In Indiana
-
I
-
I
7%
1 00%
Independent Bankers Life
Re-insurance Co. of Indiana
Citizens Bank
Mooresville, I N U . S.A.
Incorporated in Indiana
I
1 00%
CITBA Investments, Inc.
Las Vegas, NV U.S.A.
Incorporated in Nevada
JtA
I
Brownsburg, IN U.S.A.
�
-
II
I
I
I
---
1 00%
Citizens Insurance Services, Inc.
Mooresville, IN U.S.A.
-
-
- - -
--
-
-
Results: A list of branches for your depository institution: CfTlZENS BANK (IO_RSSO: 4041).
TI1is depository institution is held by CITBA FINANCIAL CORPORATION (1207208) of MOORESVILLE, IN.
The data are as of 12/31/2014. Data reflects information that was received and processed through 01/07/2015.
Reconclllatlon and Verifiation St�ps
1. In the Dill Action column of each branch row, enter one or more of the actions specified below.
2. If required, enter the date in the Effective Dale column.
&1l2ru
OK: If the branch information s
i correct, enter 'OK' in the 011111 A.d:lon column.
Ch1n1e: If the branch Information is incorrect or incomplete, revise the data, enter 'Chanae' In the 01111 Ad:lon column and the date when this Information first became valid In the Effeccive Date column.
Clos•: If a branch listed was sold or closed, enter 'Close' in the Data A.ction column and the sale or closure date in the Effective Date column.
Oelet•: lf a branch listed was never owned by this depository imtltutlon, enter 'Delete' in the Data Action column.
Add: If 1 reportable branch Is missing, insert a row, add the branch data, and enter 'Add' in the Data Action column and the opening or acquisition date ln the Effective Date column.
If printing thls Ust, you mily need to adjU$l your page setup in MS heel. Try using landscape orientation, page Kaling, ilnd/or legal sized paper.
Submission Procedure
When you are finished, send a �ved copy to your FRB contact. See the detailed instructions on this site for more information.
If you are e-mailln1 this to your FRB contact, put your institution name, city and state in the subject line of the e-mail.
Note:
To satisfy the FR Y-10 reportln1 requirements, you must also submit FR Y-10 Domestic Branch Schedules for each br.mch with a Data Action of Ch•nae, Oose, Delete, or Add.
The FR Y-10 report may be submitted in a hardcopy format or via the FR Y·lO Online application - https:/fylOonline.federillreserve.aov.
•
FDIC UNINUM, Office Number, and ID_RSSD columns are for reference only. Verification of these values is not required.
0.to Acllon Elledlve llate
OK
Branch Service Tvoe
Full Service IHead Office!
Branch ID RSso•
PoouluN1me
44741 cmZENS BANK
Street Address
Cltv
33 NORTH INDlANA STREET
MOORESVILLE
3763566 AVON BRANCH
100 NORTH STATE ROAD 267
AVON
OK
Full Service
3493256 HEARTlAND CROSSI NG BRANCH
OK
Full Service
2418627 EMINENCE BRANCH
OK
Full Service
3493247 COUNTY LINE ROAO BRANCH
10503 HEARTLAND BOULEVARD
OK
Full Service
2418636 EAST MORGAN BRANCH
OK
Full Service
2418618 MORTON AVENUE BRANCH
1098 STATE ROAD 39 BYPASS
OK
Full Service
2098337 MONROVIA BRANCH
35 WEST WASHINGTON STREET
OK
Full Service
2098328 WHITE LICK BRANCH
OK
Full Service
2100B92 PLAINFIELD BRANCH
445 SOUTH INOIANA STREET
OK
Full Service
State ZiD CDde
Countv
IN
46158
MORGAN
HENDRICKS
Countrv
FDIC UNINUM•
Head Office
Office Number•
Head Office ID RSsD•
UNITTO STATES
6169
0 cmZENS BANK
44741
IN
46123
UNITED STATES
466125
15 CITIZENS BANI<
44741
CAMBV
IN
46113
HENDRICKS
UNITED STATES
419919
44741
EMINENCE
IN
46125
MORGAN
UNITED STATES
220770
8 CITIZENS BANK
44741
2334 EAST COUNTY LINE ROAD
INOJANAPOUS
11
CITIZENS BANK
6497 STATE ROAD 42
1360 EAST MORGAN STREET
MARTINSVlllE
2402
EAST MAIN STREET
428148
IN
46227
MARION
12 CITIZENS BANK
44741
IN
46151
MORGAN
UNITED STATES
220771
9 CITIZENS BANK
44741
MARTINSVILLE
IN
46151
MORGAN
220769
IN
46157
MORGAN
MOORESVILLE
IN
46158
MORGAN
UNITEO STATES
220765
7 CITIZENS BANK
44741
MON ROVIA
UNITED STATES
PlAINFIElD
IN
46168
HENDRICKS
UNITEO STATES
220767
UNITED STATES
UNITED STATES
220764
2 CITIZENS BANK
44741
3 CITIZENS BANK
44741
s
44741
cmzENS BANK
Comments
.,
FORM F R Y-6
3 1 -Dec-1 4
Report Item 3: Shareholders
Current shareholders with ownership, control or holdings of 5% or more with
(1 )(a)
Shareholders not listed in ( 1 )(a) through (1)© that had oweneship, control or
holding of 5% or more with power to vote during the fiscal year ending 12-3 1 - 1 4
power t o vote a s o f fiscal year ending 12-31-2014
(1 )(b)
(1)©
(2)(b)
(2)©
Name &
Country of Citizenship
Number & Percentage
Name &
Country of Citizenship
Number & Percentage
City, State , Country
or Incorporation
of Each Class of Voting Stock
City, State, Country
or Incorporation
of Each Class of Voting Stock
Ralph E. Daum
USA
66,241 1 7. 1 5%
Plainfield, I N, USA
(2)(a)
NONE
FORM FR Y-6
31 -Dec-14
Report Item
4:
Directors & Executive Officers of Bank Holding Company
(2 )
Principal
Occupation
if other than
with BHC
(3)(a )
Title &
Position
with BHC
( 3)( b)
Title & Position
with
Subsidiaries
Calvin A. Persohn
Greenwood, I N
Retired
Director
Director
Citizens Bank
N/A
.05
N/A
N/A
Stephen T. Mills
Indianapolis, IN
Farming
Director &
Chairman
Director &
Chairman
Citizens Bank
Farmer
3.05
N/A
N/A
Thomas A. Hubbard
Mooresville, I N
Sales
Director
Director
Citizens Bank
78
NIA
N/A
David M. Kollmeyer
Mooresville, I N
Retired
Director &
Secretary
Director
Citizens Bank
.20
N/A
N/A
Jon Williams
Greenwood, I N
Attorney
Director &
Vice Chair
Director &
Vice Chair
Citizens Bank
.27
N/A
N/A
Keith A. Lindauer
Franklin, I N
N/A
Director &
PresidenUCEO
Director, President & CEO
Citizens Bank
0
N/A
N/A
William R. Keller
Martinsville, I N
President
Director
Director
Citizens Bank
Owner/Operator
Keller's Office Supply
.05
N/A
N/A
Jeffrey A. Banning
Mooresvi lle, I N
Owner &
President
Director
Director
Citizens Bank
Owner
Banning Engineering
.01
N/A
N/A
Larry R. Heydon
Greenwood, IN
PresidenUCEO
Director
Director
Citizens Bank
President & CEO
Johnson Memorial Hosp.
.01
N/A
N/A
(1 )
Name &
City State & Country
( 3) c
Title & Position
with other
Businesses
Sales Representative
Sunrise Energy Systems Inc
N/A
Attorney/Partner
Williams Barrett & Wilkowski
N/A
(4)(a)
% of voting
shares in
BHC
.
(4)( b)
% of voting
shares in
subsidiaries
(4) c
List of other
companies
if 25% of more
of voting shares
are held

aµ IA - Federal Reserve Bank of Chicago

Transcription

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