-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QFXCwcq1yvx3cyFqmHIDyGVgY38RxlON8awbRy5J65MLksAMGKz4uujRFjaAl+p6 vLpKF7/7sXJQqjC+ISr3eg== 0000713095-95-000012.txt : 19951012 0000713095-95-000012.hdr.sgml : 19951012 ACCESSION NUMBER: 0000713095-95-000012 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19951011 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FARMERS CAPITAL BANK CORP CENTRAL INDEX KEY: 0000713095 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 611017851 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14412 FILM NUMBER: 95579852 BUSINESS ADDRESS: STREET 1: W MAIN ST PO BOX 309 STREET 2: ONE FARMERS BANK PLZ CITY: FRANKFORT STATE: KY ZIP: 40602 BUSINESS PHONE: 5021171600 MAIL ADDRESS: STREET 1: P O BOX 309 STREET 2: WEST MAIN STREET CITY: FRANKFORT STATE: KY ZIP: 40602 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10Q A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to ____________ Commission File Number 0-14412 Farmers Capital Bank Corporation (Exact name of registrant as specified in its charter) Kentucky 61-1017851 (State or other jurisdiction of incorporation (I.R.S. Employer Identification or organization) Number) P.O. Box 309, West Main Street Frankfort, Kentucky 40602 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (502)227-1600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes No ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, par value $0.25 per share 3,866,382 shares outstanding at August 10, 1995 TABLE OF CONTENTS Part I - Financial Information Page No. Item 1 - Financial Statements Consolidated Balance Sheets - June 30, 1995 and December 31, 1994 3 Consolidated Statements of Income - For the Three Months and Six Months Ended June 30, 1995 and June 30, 1994 4 Consolidated Statements of Cash Flows - For the Six Months Ended June 30, 1995 and June 30, 1994 5 Notes to the Consolidated Financial Statements 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information Item 1 - Legal Proceedings 13 Item 4 - Results of votes of security holders 13 FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except per share data) (unaudited) June 30, December 31, 1995 1994 ASSETS Cash and cash equivalents: Cash and due from banks $ 60,896 $ 56,304 Interest bearing deposits in other banks 4,232 577 Federal funds sold and securities purchased under agreements to resell 35,575 43,670 Total cash and cash equivalents 100,703 100,551 Investment securities: Available for sale 77,985 72,466 Held to maturity 114,529 120,477 Loans 555,339 544,566 Less: Allowance for loan losses (8,093) (8,889) Unearned income (11,986) (11,376) Loans, net 535,260 524,301 Bank premises and equipment 20,130 20,588 Interest receivable 7,490 6,778 Other assets 7,434 6,542 TOTAL ASSETS $ 863,531 $ 851,703 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest bearing $ 110,305 $ 104,615 Interest bearing 604,455 592,762 Total deposits 714,760 697,377 Other borrowed funds 40,131 47,710 Dividends payable 1,276 1,276 Interest payable 2,081 1,715 Other liabilities 3,817 3,561 Total liabilities 762,065 751,639 SHAREHOLDERS' EQUITY Common stock par value $0.25 per share 4,804,000 shares authorized; 3,866,382 shares issued and outstanding at June 30, 1995 and December 31, 1994 967 967 Capital surplus 9,094 9,094 Retained earnings 92,504 90,524 Unrealized net loss on securities available for sale (1,099) (521) Total shareholders' equity 101,466 100,064 TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 863,531 $ 851,703 See notes to consolidated financial statements FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 INTEREST INCOME Interest and fees on loans $ 13,313 $ 11,325 $ 26,203 $ 22,141 Interest on investment securities: Taxable 2,011 1,457 3,802 2,963 Nontaxable 558 590 1,120 1,130 Interest on deposits in other banks 22 2 51 25 Interest on federal funds sold and securities purchased under agreements to resell 692 489 1,568 958 Total interest income 16,596 13,863 32,744 27,217 INTEREST EXPENSE Interest on deposits 6,496 4,795 12,559 9,562 Interest on other borrowed funds 492 309 1,013 577 Total interest expense 6,988 5,104 13,572 10,139 Net interest income 9,608 8,759 19,172 17,078 Provision for loan losses 1,048 419 1,761 1,066 Net interest income after provision for loan losses 8,560 8,340 17,411 16,012 NONINTEREST INCOME Service charges and fees 1,180 990 2,271 1,931 Trust income 277 349 454 574 Investment gains (losses), net 1 (36) 1 (75) Other 1,755 2,039 3,049 3,407 Total noninterest income 3,213 3,342 5,775 5,837 NONINTEREST EXPENSE Salaries and employee benefits 4,068 3,882 8,152 7,654 Occupancy expenses, net 708 534 1,264 1,040 Equipment expenses 646 610 1,341 1,266 Bank shares tax 275 269 572 529 FDIC insurance 397 374 793 749 Other 2,573 1,809 4,602 3,740 Total noninterest expense 8,667 7,478 16,724 14,978 Income before income taxes 3,106 4,204 6,462 6,871 Income tax expense 920 1,260 1,930 2,058 NET INCOME $ 2,186 $ 2,944 $ 4,532 $ 4,813 Per common share: Net income $ 0.57 $ 0.76 $ 1.17 $ 1.24 Dividends declared $ 0.33 $ 0.30 $ 0.66 $ 0.60 Weighted average shares outstanding 3,866 3,866 3,866 3,866 See notes to consolidated financial statements FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands except per share data) (unaudited) Six Months Ended June 30, 1995 1994 Cash flows from operating activities Net income $ 4,532 $ 4,813 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,331 1,291 Net amortization of investment securities premiums and discounts: Available for sale (415) 110 Held to maturity 136 158 Provision for loan losses 1,761 1,066 Deferred income tax (1) (27) Gain on sale of fixed assets (1) 5 Loss (gain) on sale of securities: Available for sale 78 Held to maturity (1) (3) Changes in: Interest receivable (712) (179) Other assets (869) 816 Interest payable 366 (70) Other liabilities 256 730 Net cash provided by operating activities 6,383 8,788 Cash flows from investing activities Proceeds from maturity of investment securities: Available for sale 45,727 22,678 Held to maturity 27,842 19,457 Proceeds from sale of available for sale investment securities 11,603 Purchase of investment securities: Available for sale (51,708) (26,971) Held to maturity (22,028) (23,137) Net increase in loans (12,720) (32,989) Purchase of bank premises and equipment (597) (555) Proceeds from sale of equipment 1 10 Net cash used in investing activities (13,483) (29,904) Cash flows from financing activities Net increase in deposits 17,383 22,906 Dividends paid (2,552) (2,320) Net decrease in other borrowed funds (7,579) (1,056) Net cash provided by financing activities 7,252 19,530 Net change in cash and cash equivalents 152 (1,586) Cash and cash equivalents at beginning of year 100,551 97,784 Cash and cash equivalents at end of period $ 100,703 $ 96,198 Supplemental disclosures: Cash paid during the year for: Interest $ 13,206 $ 10,445 Income taxes 2,036 2,255 See notes to consolidated financial statements FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation, have been included. Operating results for the periods ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1994. NOTE 2 - EFFECT OF IMPLEMENTING SFAS NO. 122 In May 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No. 122 "Accounting for Mortgage Servicing Rights". This Statement amends FASB Statement No. 65, "Accounting for Certain Mortgage Banking Activities", to require that a mortgage banking enterprise recognize as separate assets rights to service mortgage loans for others, however those servicing rights are acquired. The total cost of the mortgage loans should be allocated between the mortgage servicing rights and the loans based on their relative fair values if it is practicable to estimate those fair values. If not, the entire cost should be allocated to the mortgage loans. This Statement applies prospectively in fiscal years beginning after December 15, 1995. The Company does not expect the implementation of this Statement to have a material affect on the financial statements. NOTE 3 - NONRECCURRING EVENT Net income after taxes during the second quarter of 1994 was increased by $503,000 due to a nonrecurring recovery of prior year losses. FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Second Quarter 1995 vs. Second Quarter 1994 The Company reported earnings of $2.2 million, or $0.57 per share, for the second quarter of 1995 compared to $2.9 million, or $0.76 per share one year ago. During the second quarter of 1994, net income after taxes was increased by $503,000 due to a nonrecurring recovery of prior year losses. Return on average assets and return on average equity for the second quarter of 1995 were 1.00% and 8.66%, respectively, compared to 1.18% and 10.13% for the same period in 1994 after adjusting for the nonrecurring recovery. Net Interest Income Net interest income totaled $9.6 million, compared to $8.8 million for the second quarter of 1994. The net interest margin (net interest income as a percentage of average earning assets), increased to 5.18% compared to 4.99% for 1994 while the spread between rates earned and paid remained at 4.46%. Asset Quality The provision for loan losses increased $629 thousand compared to the second quarter of 1994. The Company had net charge-offs of $2.0 million compared to $154 thousand last year. Management feels the current reserve is adequate to cover any potential future losses within the loan portfolio. Management also continues to emphasize collection efforts and evaluation of risks within the portfolio. Noninterest Income Noninterest income of $3.2 million was up $482 thousand above last year's figure adjusted for the nonrecurring recovery. Service charges or deposits increased $190 thousand, or 19.2% to $1.2 million. Trust fees decreased $72 thousand, or 20.6% to $277 thousand. Investment gains were inconsequential in both years. Noninterest Expense Total noninterest expense increased $1.2 million, or 15.9% from the second quarter of 1994 to $8.7 million. Salaries and benefits, the largest component of noninterest expense, increased $186 thousand, or 4.8%. A large increase in health insurance premiums was a factor. Occupancy expense increased $174 thousand or 32.6%. Equipment expense increased $36 thousand, or 5.9%. Bankshares tax increased $6 thousand or 2.2%. FDIC insurance expense increased $23 thousand or 6.1%. Income Taxes Income tax expense decreased $340 thousand, or 27.0% from the second quarter of 1994. The change in income tax expense can be directly attributed to the decline in income before taxes. The effective tax rate was 30% for both time periods. First Six Months of 1995 Net income for the six months was $4.5 million, or $1.17 per share compared to $4.8 million, or $1.24 for the same period in 1994. After adjusting for the nonrecurring recovery, net income is up $222 thousand or 5.2%. The return on average assets was 1.05% compared to 1.06% for the same period in 1994 after adjusting for the nonrecurring recovery. The return on equity was unchanged at 9.08%. Net Interest Income Net interest income for the first six months totaled $19.2 million, compared to $17.1 million last year. Interest and fees on loans is up $4.1 million, or 18.3%. Interest on taxable securities is up $839 thousand, or 28.3%. Interest on nontaxable securities is unchanged at $1.1 million. Interest on short term investments is up $610 thousand, or 63.7% Interest expense on deposits is up $3.0 million, or 31.3%. Interest expense on short term borrowings is up $436 thousand, or 75.6%. The net interest margin increased to 5.16% from 4.88% for the first six months in 1994. The spread increased to 4.44% from 4.34%. Asset Quality The provision for loan losses increased $695 thousand, or 65.2%, compared to 1994. The Company had net charge-offs of $2.6 million compared to $634 thousand in the prior year. The allowance for loan losses was 1.49% of net loans, down from 1.69% at the end of the second quarter of 1994. Management feels the current reserve is adequate to cover any potential future losses within the loan portfolio. Management also continues to emphasize collection efforts and evaluation of risks within the portfolio. Several loans to one borrower (an entity controlled by relatives of a director), totaling $976 thousand were charged off during the second quarter of 1995. Remaining loans with this borrower have been addressed in determining the current amount of reserve necessary to cover potential future losses. The second quarter charge offs also includes $642 thousand of consumer installment loans. The Company is in the process of revaluating policies and regulations with respect to the consumer loan portfolio. Management believes the current reserve is adequate to cover any potential future losses within the loan portfolio. Noninterest Income Noninterest income for the six months ended June 30, 1995 totaled $5.8 million, up $549 thousand from the first six months of 1994 after adjusting for the nonrecurring recovery. Service charges increased $340 thousand, or 17.6%. Trust income was down $120 thousand, or 20.9%. Noninterest Expense Noninterest expense for the first half of 1995 was $16.7 million, up $1.7 million, or 11.7% rom last year. Salaries and benefits were up $498 thousand, or 6.5%. A large increase in health insurance premiums was a factor. Occupancy expense was up $224 thousand, or 21.5%. Equipment expense was up $75 thousand, or 5.9%. Bank shares tax increased $43 thousand, or 8.1%. FDIC insurance increased $44 thousand, or 5.9%. Income Taxes Income taxes decreased $128 thousand, or 6.2% from last year and totaled $1.9 million. The effective tax rate was unchanged at 30%. Financial Condition Total assets were $866 million on June 30, 1995, an increase of $14 million, or 1.6% from December 31, 1994. Assets averaged $871 million for the first six months of 1995, an increase of $19 million, or 2.3% from 1994. Loans Net loans increased $11 million, or 2.1% from December 31, 1994 to $535 million. The loan growth can be primarily attributed to real estate loans. On average, loans represented 69.3% of earning assets compared to 68.7% for 1994. Temporary Investments Federal funds sold and securities purchased under agreements to resell averaged $54 million, relatively unchanged from 1994. Investment Securities Investment securities were $193 million on June 30, 1995, unchanged from year-end 1994. Available for sale and held to maturity securities were $78 million and $115 million respectively. Investment securities averaged $184 million for the first six months, an increase of $7 million, or 3.9%, from the 1994 average. Net unrealized losses after tax on securities available for sale was $1.1 million on June 30, 1995, as compared to $521 thousand on December 31, 1994. The Company has the capability to hold these securities to maturity and should therefore not realize any loss of principal. Nonperforming Assets Nonperforming assets totaled $6.3 million on June 30, 1995, down $2.6 million, or 29.3%, from year-end 1994. Nonperforming assets to total equity declined to 6.2% from 8.9%. Nonperforming assets as a percentage of loans and other real estate was 1.1%, down from 1.7% at year-end. Nonaccrual loans were $2.0 million, down from $3.9 million from year-end. This decline in nonaccrual loans is due to charge-offs of $1.0 million and transferring $1.0 million to other real estate. Loans 90 past due increased to $1.9 million from $1.1 million. Restructured loans were $1.3 million, down from $3.5 million. Other real estate owned increased to $1.1 million at June 30, 1995, up from $380 thousand at year-end 1994. Deposits Total deposits increased $17 million, or 2.5%, from year-end to $715 million. Deposits averaged $691 million during the first six months of 1995. The increase can be primarily attributed to growth in certificates of deposit less than $100,000. Borrowed Funds Borrowed funds totaled $40.1 million, a decrease of $7.6 million, or 15.9% from year-end 1994. Borrowed funds averaged $35 million. Shareholders' Equity Shareholders' equity was $101 million on June 30, 1995, increasing $1.4 million from year- end. Dividends of $2.6 million were declared during the first six months of 1995. The Company's ratios as of June 30, 1995 and the regulatory minimums are as follows: Farmers Capital Regulatory Bank Corporation Minimum Tier 1 risk based 17.73% 4.00% Total risk based 18.98% 8.00% Leverage 11.61% 3.00% The capital ratios of all the subsidiary banks, on an individual basis, were in excess of the applicable minimum regulatory capital ratio requirements at June 30, 1995. Accounting requirements In May 1995, the Financial Accounting Standards Board issued SFAS No. 122 "Accounting for Mortgage Servicing Rights". This Statement amends FASB Statement No. 65, "Accounting for Certain Mortgage Banking Activities", to require that a mortgage banking enterprise recognize as separate assets rights to service mortgage loans for others, however those servicing rights are acquired. The total cost of the mortgage loans should be allocated between the mortgage servicing rights and the loans based on their relative fair values if it is practicable to estimate those fair values. If not, the entire cost should be allocated to the mortgage loans. This Statement applies prospectively in fiscal years beginning after December 15, 1995. The Company does not expect the implementation of this Statement to have a material affect on the financial statements. Liquidity The liquidity of the Company is somewhat dependent on the receipt of dividends from its subsidiary banks. Management expects that in the aggregate its subsidiary banks will continue to have the ability to dividend adequate funds to the Company during the remainder of 1995. The Company's objective as it relates to liquidity is to insure that subsidiary banks have funds available to meet deposit withdrawals and credit demands without unduly penalizing profitability. In order to maintain a proper level of liquidity, the banks have several sources of funds available on a daily basis which can be used for liquidity purposes. These sources of funds are: 1. The bank's core deposits consisting of both business and nonbusiness deposits. 2. Cash flow generated by repayment of loan principal and interest 3. Federal funds purchased Liquidity projections are reviewed on a monthly basis and it is rare for a bank to call on the third source of funds to meet liquidity requirements. Generally, sources one and two are sufficient. For the longer term, the liquidity position is managed by balancing the maturity structure of the balance sheet. This process allows for an orderly flow of funds over an extended period of time. Part II ITEM 1 - LEGAL PROCEEDINGS There have been no significant changes in contingencies or commitments, including pending litigation to report at this time. ITEM 4 - RESULTS OF VOTE OF SECURITY HOLDERS The annual meeting of shareholders was held May 9, 1995. The matters that were voted upon included: A. The election of four directors for three-year terms ending 1998, or until their successors have been elected and qualified. B. The ratification of the appointment of Coopers & Lybrand as independent accountants for the Corporation and its subsidiaries for the calendar year 1995. The outcome of the voting is as follows: Name For Against Withheld Abstained Warner U. Hines 3,113,967 0 0 752,415 John J. Hopkins 3,113,534 0 433 752,415 Dr. John P. Stewart 3,113,967 0 0 752,415 William R. Sykes 3,113,967 0 0 752,415 Ratification of the appointment of Coopers & Lybrand, LLP 2,938,129 169,448 0 758,805 Listed below is the name of each director whose term of office continued after the meeting: Dr. John P. Stewart Warner U. Hines Charles S. Boyd John J. Hopkins E. Bruce Dungan Dr. John D. Sutterlin William R. Sykes Joseph C. Yagel, Jr. Michael M. Sullivan Charles O. Bush In addition to the directors above, Frank Sower and Charles T. Mitchell serve as Advisory Directors for the Corporation. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: 10/11/95 /s/ Charles S. Boyd Charles Scott Boyd President and CEO (Principal Executive Officer) Date: 10/10/95 /s/ C. Douglas Carpente Cecil Douglas Carpenter Vice President and CFO (Principal Financial and Accounting Officer) EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
9 This schedule contains summary financial information extracted from June 30, 1995 financial statements and is qualified in its entirety by reference to such financial statements. 1000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 60,896 4,232 35,575 0 77,985 114,529 113,770 535,260 8,093 863,531 714,760 40,131 7,174 0 967 0 0 101,499 863,531 26,203 4,922 1,619 32,744 12,559 1,013 19,172 1,761 1 16,724 6,462 6,462 0 0 4,532 1.17 0 5.16% 2,000 1,900 1,300 0 8,888 2,860 304 8,093 8,093 0 0
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