-----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, CiXkv31ihMgftzIHF3sd2EdGcfeWbRYyReyDQ/RLOs97/h+5iBHJRkeDpalLuvUt h29Yrwd4zsh3CA4SDASuuQ== 0000713095-96-000015.txt : 19960517 0000713095-96-000015.hdr.sgml : 19960517 ACCESSION NUMBER: 0000713095-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-14412 FILM NUMBER: 96565430 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 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 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 (I.R.S. Employer Identification Number) of incorporation or organization) P.O. Box 309, 201 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 X 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 May 10, 1996 TABLE OF CONTENTS Part I - Financial Information Page No. Item 1 - Financial Statements Consolidated Balance Sheets March 31, 1996 and December 31, 1995 3 Consolidated Statements of Income - For the Three Months Ended March 31, 1996 and March 31, 1995 4 Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 1996 and March 31, 1995 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 11 Item 6 - Exhibits and Reports on Form 8-K 11 FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share data) (unaudited) March 31, December 31, 1996 1995 ASSETS Cash and cash equivalents: Cash and due from banks $ 66,315 $ 41,126 Interest bearing deposits in other banks 2,236 688 Federal funds sold and securities purchased under agreements to resell 32,605 68,370 Total cash and cash equivalents 101,156 110,184 Investment securities: Available for sale 122,068 105,933 Held to maturity 115,862 120,991 Loans 548,044 554,942 Less: Allowance for loan losses (8,807) (8,472) Unearned income (10,805) (11,762) Loans, net 528,432 534,708 Bank premises and equipment 19,784 19,916 Interest receivable 7,542 7,889 Other assets 5,099 6,492 TOTAL ASSETS $ 899,943 $ 906,113 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest bearing $ 105,603 $ 109,490 Interest bearing 646,711 645,371 Total deposits 752,314 754,861 Other borrowed funds 33,420 38,524 Dividends payable 1,392 1,392 Interest payable 2,367 2,370 Other liabilities 4,333 4,037 Total liabilities 793,826 801,184 SHAREHOLDERS' EQUITY Common stock par value $0.25 per share 4,804,000 shares authorized; 3,866,382 shares issued and outstanding at March 31, 1996 and December 31, 1995 967 967 Capital surplus 9,094 9,094 Retained earnings 96,757 95,694 Unrealized net loss on securities available for sale (701) (826) Total shareholders' equity 106,117 104,929 TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 899,943 $ 906,113 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 March 31, 1996 1995 INTEREST INCOME Interest and fees on loans $ 13,309 $ 12,891 Interest on investment securities: Taxable 2,196 1,790 Nontaxable 679 562 Interest on deposits in other banks 11 29 Interest on federal funds sold and securities purchased under agreements to resell 771 876 Total interest income 16,966 16,148 INTEREST EXPENSE Interest on deposits 6,936 6,059 Interest on other borrowed funds 387 525 Total interest expense 7,323 6,584 Net interest income 9,643 9,564 Provision for loan losses 1,270 713 Net interest income after provision for loan losses 8,373 8,851 NONINTEREST INCOME Service charges and fees 1,330 1,091 Trust income 191 177 Investment gain 10 Other 1,366 1,294 Total noninterest income 2,897 2,562 NONINTEREST EXPENSE Salaries and employee benefits 4,215 4,084 Occupancy expenses, net 551 556 Equipment expenses 660 695 Bank shares tax 261 297 Deposit insurance expense 3 396 Other 2,157 2,029 Total noninterest expense 7,847 8,057 Income before income taxes 3,423 3,356 Income tax expense 968 1,011 NET INCOME $ 2,455 $ 2,345 Per common share: Net income $ 0.64 $ 0.61 Dividends declared $ 0.36 $ 0.33 Weighted average shares outstanding 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) Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net income $ 2,455 $ 2,345 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 631 668 Net amortization of investment securities premiums and discounts: Available for sale (149) (205) Held to maturity 46 75 Provision for loan losses (1,270) 713 Investment security gain on call: Held to maturity (10) Changes in: Interest receivable 347 375 Other assets 1,195 (150) Interest payable (3) 237 Other liabilities 295 569 Net cash provided by operating activities 3,537 4,627 Cash flows from investing activities: Proceeds from maturity or call of investment securities: Available for sale 48,544 30,587 Held to maturity 12,635 13,553 Purchase of investment securities: Available for sale (64,342) (33,229) Held to maturity (7,542) (12,962) Net increase in loans 7,546 (6,492) Purchase of bank premises and equipment (363) (229) Net cash used in investing activities (3,522) (8,772) Cash flows from financing activities: Net increase (decrease) in deposits (2,547) 21,930 Dividends paid (1,392) (1,276) Net decrease in other borrowed funds (5,104) (10,787) Net cash provided by (used in) financing activities (9,043) 9,867 Net change in cash and cash equivalents (9,028) 5,722 Cash and cash equivalents at beginning of year 110,184 100,551 Cash and cash equivalents at end of period $ 101,156 $ 106,273 Supplemental disclosures: Cash paid during the period for: Interest $ 7,326 $ 6,347 Income taxes None None Cash dividend declared and unpaid 1,392 1,276 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 period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. 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, 1995. NOTE 2 - RECLASSIFICATIONS Certain reclassifications have been made to the consolidated financial statements of prior periods to conform to the current period presentation. These reclassifications do not affect net income or shareholders' equity as previously reported. FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS First Quarter 1996 vs. First Quarter 1995 The Company reported earnings of $2.5 million, or $.64 per share, for the first quarter of 1996 compared to earnings of $2.3 million, or $.61 per share for the first quarter of 1995. Return on average assets was 1.10% for the first quarter of 1996, unchanged from 1.10% reported for the same period of 1995. Return on average equity was 9.37% for the first quarter of 1996, a decrease from 9.50% during the same period of 1995. STATEMENT OF INCOME REVIEW Net Interest Income Net interest income totaled $9.6 million, unchanged from the first quarter 1995. Interest and fees on loans is up $418 thousand or 8.2%. Interest on taxable securities is up $406 thousand, or 22.7% and interest on nontaxable securities is up $117 thousand, or 20.8%. Interest on short term investments is down $105 thousand, or 12.0%. Interest expense on deposits is up $877 thousand, or 14.5%. Interest on short term borrowings is down $138 thousand, or 26.3%. The net interest margin (net interest income as a percentage of average earning assets), decreased to 4.99% during the first quarter of 1996 compared to 5.15% in the first quarter of 1995. The spread between rates earned and paid decreased to 4.26% compared to 4.44% in the first quarter of 1995. Asset Quality The provision for loan losses increased $557 thousand compared to the first quarter 1995. The Company had net charge-offs of $934 thousand in the first quarter of 1996 compared to net charge-offs of $570 thousand in the same period of 1995. The allowance for loan losses was 1.64% of net loans in the first quarter of 1996, up 8 basis points from year end 1995. 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 $2.9 million increased $335 thousand, or 13.1% from the first quarter of 1995. Service charges on deposits increased $239 thousand, or 21.9% to $1.3 million. Trust fees increased $14 thousand, or 7.9% to $191 thousand. The Company had a $10 thousand gain on a called investment security during the first quarter of 1996 compared to no gain or loss in the same period of 1995. Noninterest Expense Total noninterest expenses decreased $210 thousand or 2.6% from the first quarter of 1995 to $7.8 million. Salaries and benefits, the largest component of noninterest expense, increased $131 thousand, or 3.2%. Occupancy expense, net of rental income, was unchanged at approximately $550 thousand. Equipment expenses decreased $35 thousand, or 5.0%. Taxes on bank shares decreased $36 thousand, or 12.1%. FDIC insurance expense decreased $393 thousand, or 99.2% due to the FDIC charging a nominal premium in the first quarter of 1996. Income taxes Income tax expense decreased $43 thousand, or 4.3% from the first quarter of 1995 to $968 thousand. The 1996 effective tax rate was 28%, down slightly from 30% in 1995. The reduction in the tax rate was due primarily to the increased purchases of municipal bonds. BALANCE SHEET REVIEW Total assets were $900 million on March 31, 1996, less than a 1% change from December 31, 1995. Assets averaged $894 million for the first quarter of 1996, an increase of $32 million, or 3.7% from year end 1995. Loans Loans, net of unearned income, decreased $5.9 million, or 1.1% from December 31, 1995 to $537 million. On average, loans represented 66.1% of earning assets compared to 69.4% for 1995. When loan demand is down, the available funds are redirected to either temporary investments or investment securities. Temporary Investments Federal funds sold and securities purchased under agreements to resell averaged $53 million, an increase of $1 million, or 1.9% from year end 1995. Investment Securities Investment securities were $238 million on March 31, 1996, an increase of $11 million, or 4.8% from year end 1995. Available for sale and held to maturity securities were $122 and $116 million, respectively. Investment securities averaged $224 million for the first quarter of 1996, an increase of $65 million, or 35% from year end 1995. Net unrealized losses after tax on securities available for sale were $701 thousand on March 31, 1996, as compared to $826 thousand on December 31, 1995. Nonperforming assets Nonperforming assets totaled $8.8 million on March 31, 1996, up $1.8 million or 26.3% from $6.9 million at year end 1995. Nonperforming assets to total equity increased from 6.6% at year end 1995 to 8.3% at March 31, 1996. Nonperforming assets as a percentage of loans and other real estate increased from 1.28% at year end to 1.63%. The Company's loan policy includes strict guidelines for approving and monitoring loans. This along with management's efforts to improve the quality of the loan portfolio has decreased the Company's nonperforming assets 61.7% since December 31, 1991. Other real estate owned decreased $693 thousand, or 89.3% from year end 1995 to $83 thousand on March 31, 1996. Deposits Total deposits decreased $2.5 million, or 0.3%, from year end 1995 to $752 million. Deposits averaged $751 million, an increase of $29 million, or 4.0% from year end 1995. Borrowed Funds Borrowed funds totaled $33 million, a decrease of $5 million, or 13.2% from year end 1995. Borrowed funds averaged $32 million, a decrease of $2 million, or 5.3%. Shareholders' Equity Shareholders' equity was $106 million on March 31, 1996, increasing $1.2 million from year end 1995. Dividends of $1.4 million were declared during the first quarter of 1996. The Company's capital ratios as of March 31, 1996 and the regulatory minimums are as follows: Farmers Capital Regulatory Bank Corporation Minimum Tier 1 risk based 18.34% 4.00% Total risk based 19.59% 8.00% Leverage 11.67% 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 March 31, 1996. Liquidity The liquidity of the Company is 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 1996. 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 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 are no significant changes in contingencies or commitments, including pending litigation to report at this time. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit 27 - Financial Data Schedule b) Reports on Form 8-K 1) On April 1, 1996, the Corporation filed a report on Form 8-K, pursuant to Item 5 of that form. The Corporation reported a restructuring of its Board of Directors. No financial statements were filed as part of that report. 2) On May 10, 1996, the Corporation filed a report on Form 8-K pursuant to Item 5 of that form. The Corporation reported it had entered into an agreement to sell its twelve consumer finance offices. No financial statements were filed as part of that report. 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: 05/15/96 /s/ Charles Scott Boyd Charles Scott Boyd, President and CEO (Principal Executive Officer) Date: 05/14/96 /s/ C. Douglas Carpenter Cecil Douglas Carpenter Vice President and CFO (Principal Financial and Accounting Officer) EX-27 2
9 This schedule contains summary financial information extracted from March 31, 1996 financial statements and is qualifed in its entirety by reference to such financial statements. 1000 6-MOS DEC-31-1996 MAR-31-1996 66315 2236 32605 0 122068 115862 116096 537239 8807 899943 752314 29596 8092 3824 967 0 0 105150 899943 13309 2875 782 16966 6936 7323 9643 1270 10 7847 3423 2455 0 0 2455 0.64 0 1.19 5257 2853 1316 0 8472 1069 134 8807 8807 0 0
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