UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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: 33-96358
BOURBON BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-0993464
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 157, Paris, Kentucky 40362-0157
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (606)987-1795
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 _____
Number of shares of Common Stock outstanding as of July 29, 1996: 1,419,439
BOURBON BANCSHARES, INC.
Table of Contents
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income
Six Months Ending June 30, 1996 & 1995 4
Three Months Ending June 30, 1996 & 1995 5
Consolidated Statements of Cash Flows
Six Months Ending June 30, 1996 & 1995 6
Three Months Ending June 30, 1996 & 1995 7
Notes to Consolidated Financial Statements 8
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information 10
Signatures 10
Exhibits
27 Financial Data Schedule 11
Item 1 - Financial Statements
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET (unaudited)
(thousands)
<CAPTION>
6/30/9612/31/95
Assets
<S> <C> <C>
Cash & Due From Banks $ 7,987 $ 8,197
Federal Funds Sold 2,975 2,850
Total Cash & Cash Equivalents $ 10,962 $ 11,047
Investment Securities:
Securities Held to Maturity 15,892 16,455
Securities Available for Sale 62,619 76,184
Federal Home Loan Bank Stock 2,613 2,741
Loans $ 155,499 $ 155,061
Reserve for Loan Losses 1,974 1,860
Net Loans $ 153,525 $ 153,201
Premises and Equipment 4,470 4,176
Other Assets 5,726 5,627
Total Assets $ 255,807 $ 269,431
Liabilities & Stockholders' Equity
Deposits
Demand $ 26,304 $ 26,636
Savings & Interest Checking 67,472 57,340
Certificates of Deposit 119,409 129,373
Total Deposits $ 213,185 $ 213,349
Repurchase Agreements 2,125 4,660
Federal Funds Purchased 0 5,700
Federal Home Loan Bank Advances 12,945 19,071
Other Borrowed Funds 2,050 1,431
Other Liabilities 1,939 2,053
Total Liabilities $ 232,244 $ 246,264
Stockholders' Equity
Common Stock $ 8,520 $ 6,482
Retained Earnings 15,424 16,674
Net Unrealized Gains (Losses) on Investment Securities (381) 11
Total Stockholders' Equity $ 23,563 $ 23,167
Total Liabilities & Stockholders' Equity $ 255,807 $ 269,431
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT (unaudited)
(thousands, except per share amounts)
<CAPTION>
Six Months Ending 6/30/966/30/95
INTEREST INCOME:
<S> <C> <C>
Loans, including fees $ 6,749 $ 6,539
Investment Securities 2,571 2,875
Other 298 295
Total Interest Income $ 9,618 $ 9,709
INTEREST EXPENSE:
Deposits $ 4,383 $ 4,324
Other 553 832
Total Interest Expense $ 4,936 $ 5,156
Net Interest Income $ 4,682 $ 4,553
Loan Loss Provision 201 199
Net Interest Income After Provision $ 4,481 $ 4,354
OTHER INCOME:
Service Charges $ 721 $ 748
Securities Gains (Losses) 29 15
Other 257 284
Total Other Income $ 1,007 $ 1,047
OTHER EXPENSES:
Salaries and Benefits $ 1,945 $ 1,939
Occupancy Expenses 452 457
Other 1,326 1,502
Total Other Expenses $ 3,723 $ 3,898
Income Before Taxes $ 1,765 $ 1,503
Income Taxes 418 321
Net Income $ 1,347 $ 1,182
Primary earnings per share $ 0.93 $ 0.83
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT (unaudited)
(thousands, except per share amounts)
<CAPTION>
Three Months Ending 6/30/966/30/95
INTEREST INCOME:
<S> <C> <C>
Loans, including fees $ 3,423 $ 3,338
Investment Securities 1,253 1,335
Other 118 244
Total Interest Income $ 4,794 $ 4,917
INTEREST EXPENSE:
Deposits $ 2,163 $ 2,222
Other 249 415
Total Interest Expense $ 2,412 $ 2,637
Net Interest Income $ 2,382 $ 2,280
Loan Loss Provision 101 100
Net Interest Income After Provision $ 2,281 $ 2,180
OTHER INCOME:
Service Charges $ 314 $ 366
Securities Gains (Losses) 22 1
Other 164 140
Total Other Income $ 500 $ 507
OTHER EXPENSES:
Salaries and Benefits $ 984 $ 943
Occupancy Expenses 219 230
Other 641 820
Total Other Expenses $ 1,844 $ 1,993
Income Before Taxes $ 937 $ 694
Income Taxes 229 143
Net Income $ 708 $ 551
Primary earnings per share $ 0.49 $ 0.39
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)
<CAPTION>
Six Months Ending 6/30/966/30/95
Cash Flows From Operating Activities
<S> <C> <C>
Net Income $ 1,347 $ 1,182
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 363 369
Investment securities (accretion) amortization, net 67 (25)
Provision for loan losses 201 199
Investment securities losses (gains), net (29) 8
Originations of loans held for sale (6,426) (6,877)
Proceeds from sale of loans 6,187 6,908
Losses (gains) on sale of fixed assets 0 (11)
Losses (gains) on sale of loans 5 (31)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net 0 (90)
Changes in:
Interest receivable (163) 311
Income taxes refundable 0 149
Other assets 45 (501)
Interest payable 128 281
Income taxes payable 55 0
Other liabilities (534) (1,231)
Net cash provided by operating activities $ 1,246 $ 641
Cash Flows From Investing Activities
Purchases of securities available for sale $ (21,228) $ (2,842)
Proceeds from sales of securities available for sale 16,248 11,632
Proceeds from principal payments, maturities and
calls of securities available for sale 18,057 2,399
Purchase of securities held to maturity (725) (820)
Proceeds from sales, principal payments, maturities
and calls of securities held to maturity 1,290 645
Net change in loans (291) (5,616)
Purchases of bank premises and equipment (513) (109)
Proceeds from the sale of bank premises and equipment 0 100
Proceeds from sales of real estate acquired through foreclosure 57 385
Net cash provided by investing activities $ 12,895 $ 5,774
Cash Flows From Financing Activities:
Net change in deposits $ 73 $ (7,687)
Net change in securities sold under agreements to
repurchased and federal funds purchased (8,235) (4,282)
Advances from Federal Home Loan Bank 0 2,000
Payments on Federal Home Loan Bank advances (6,126) (122)
Net change in other borrowed funds 919 790
Payment on note payable (300) (600)
Repurchase of common stock (99) 0
Proceeds from issuance of common stock 0 46
Dividends paid (458) (410)
Net cash provided by financing activities $ (14,226) $ (10,265)
Net increase (decrease) in cash and cash equivalents $ (85) $ (3,850)
Cash and cash equivalents at beginning of period 11,047 15,433
Cash and cash equivalents at end of period $ 10,962 $ 11,583
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)
<CAPTION>
Three Months Ending 6/30/966/30/95
Cash Flows From Operating Activities
<S> <C> <C>
Net Income $ 708 $ 551
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 182 171
Investment securities (accretion) amortization, net 62 (14)
Provision for loan losses 100 100
Investment securities losses (gains), net (21) 22
Originations of loans held for sale (3,733) (5,017)
Proceeds from sale of loans 3,726 5,025
Losses (gains) on sale of fixed assets 0 0
Losses (gains) on sale of loans 7 (8)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net 0 0
Changes in:
Interest receivable (111) (1)
Income taxes refundable 27 (97)
Other assets (260) (667)
Interest payable 146 252
Income taxes payable (176) 123
Other liabilities (524) (1,358)
Net cash provided by operating activities $ 133 $ (918)
Cash Flows From Investing Activities
Purchases of securities available for sale $ (7,896) $ (2,269)
Proceeds from sales of securities available for sale 12,241 8,166
Proceeds from principal payments, maturities and
calls of securities available for sale 3,317 1,382
Purchase of securities held to maturity 0 0
Proceeds from sales, principal payments, maturities
and calls of securities held to maturity 790 615
Net change in loans (2,600) (1,122)
Purchases of bank premises and equipment (273) (35)
Proceeds from the sale of bank premises and equipment 0 0
Proceeds from sales of real estate acquired through foreclosure 0 0
Net cash provided by investing activities $ 5,579 $ 6,737
Cash Flows From Financing Activities:
Net change in deposits $ (1,959) $ (1,787)
Net change in securities sold under agreements to
repurchased and federal funds purchased (231) (1,117)
Advances from Federal Home Loan Bank 0 0
Payments on Federal Home Loan Bank advances (1,064) (61)
Net change in other borrowed funds 196 874
Payment on note payable (150) (450)
Repurchase of common stock (99) 0
Proceeds from issuance of common stock 0 5
Dividends paid (229) (205)
Net cash provided by financing activities $ (3,536) $ (2,741)
Net increase in cash and cash equivalents $ 2,176 $ 3,078
Cash and cash equivalents at beginning of period 8,786 8,505
Cash and cash equivalents at end of period $ 10,962 $ 11,583
</TABLE>
BOURBON BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In Managements opinion, the financial information, which is unaudited,
reflects all adjustments, (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial information as of and for
the six month and three month periods ended June 30, 1996 and June 30, 1995
in conformity with generally accepted accounting principles. These financial
statements should be read in conjunction with Bourbon Bancshares, Inc.
(Company) Annual Report on Form 10-KSB.
2. Primary earnings per share is computed by dividing net income by weighted
average number of shares of common stock outstanding and the number of shares
of common stock which would be assumed outstanding under the treasury stock
method upon exercise of stock options.
3. Dividends per share paid for the quarter ended June 30, 1996 was $0.16
compared to $0.15 on June 30, 1995. This second quarter dividend was the
same as was paid for the first quarter of 1996 and 1995.
Item 2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Summary
Bourbon Bancshares, Inc. recorded net income of $1,347 thousand, or $0.93 per
share on a primary basis for the first six months ended June 30, 1996. These
results compare to net income of $1,182 thousand or $0.83 per share on a
primary basis for 1995. Second quarters net income was $708 thousand or
$0.49 per share on a primary basis for 1996 compared to $551 thousand or
$0.39 per share on a primary basis in 1995.
Return on average assets was 1.03% for the first six months ended
June 30, 1996 compared to 0.88% for the same time period in 1995. Second
quarter's return on average assets was 1.10% for 1996 and 0.82% for 1995.
Return on average equity was 11.5% and 10.4% for the six months ended
June 30, 1996 and 1995, respectively. The three months ended June 30
revealed a return on average equity of 12.2% and 9.5% for 1996 and 1995,
respectively.
Net Interest Income
Net interest income was $4,682 thousand for the six months ended June 30, 1996
compared to $4,553 thousand in 1995, resulting in an increase of $129
thousand or 2.8%. For the three months ended June 30 net interest income
was $2,382 and $2,280 in 1996 and 1995, respectively.
Non-Interest Income
Non-interest income decreased for the six month period ended June 30 from
$1,047 thousand in 1995 to $1,007 thousand in 1996. A decrease of $27
thousand in service charges and a decrease of $27 in other income from 1995
to 1996 was offset by a $14 thousand increase in net gains on securities
from 1995 to 1996. For the three month period ended June 30, 1996 compared
to the same period in 1995, service charges decreased $52 thousand, while
net security gains increased $21 thousand and other income increased $24
thousand. During the first six months of 1996, trust fees have decreased
nearly $32 thousand. In addition, gains on loans sold amounted to $31
thousand through June 30, 1995, while losses of $5 thousand were incurred
during this time period in 1996.
Non-Interest Expense
The explanations for the decrease of nearly 4.5% in non-interest expenses
from $3,898 thousand for the six months ended June 30, 1995 to $3,723
thousand for the same period in 1996, and the decrease of $149 thousand for
the second quarter of 1996 compared to 1995 follows. In 1995 an annuity
amounting to over $57 thousand was purchased for a former manager of a
savings association. Excluding this item, salaries and benefits increased
$63 thousand for the first six months of 1995 to 1996, a modest 3% increase.
Occupancy expense decreased $5 thousand for the first six months of 1996
compared to 1995. For the first six months of 1996 compared to 1995, other
expenses decreased $176 thousand. Within other expenses, the savings
resulting from the decrease in FDIC insurance for commercial banks amounted
to nearly $200 thousand for the first six months of 1996 compared to 1995.
This is offset by net gains from the sale of other real estate of
$90 thousand.
Income Taxes
The tax equivalent rate for the six months ended June 30, 1996 and
June 30, 1995 was 24% and 21%, respectively. The rates for the three
months ended June 30, 1996 and 1995 were 24% and 21%, respectively. These
rates being less than the statutory rate is a result of the tax free
securities and loans held by the Company.
Liquidity and Funding
The cash flow statements provide a useful analysis of liquidity. This report
reveals a decrease of cash and cash equivalents for the first six months of
1996 of $85 thousand and $3,850 thousand for the same period in 1995. In
1995, this is primarily attributable to a decrease in deposits of $7,687
thousand and a decrease in securities sold under agreements to repurchase of
$4,282 thousand. During 1996, $6,126 thousand was repaid on Federal Home
Loan Bank advances and securities sold under agreements to repurchase
decreased by $8,235 thousand. These decreases in cash were offset in 1996
and 1995 by cash provided by operating activities and investing activities.
The increases for the second quarter of 1996 in cash and cash equivalents of
$2,176 in 1996 and $3,078 in 1995 were mainly attributable to cash outflows
from financing activities being more than balanced out with inflows from
operating and financing activities. Management believes there is sufficient
liquidity to meet all reasonable borrower, depositor and creditor needs in
the present economic environment.
Non-Performing Assets
As of June 30, 1996, the Company's non-performing assets totaled $1,150
thousand or 0.7% of loans compared to $395 thousand or 0.3% of loans. Real
estate loans composed over 89% and over 77% of the non-performing loans as
of June 30, 1996 and 1995, respectively.
Provision and Reserve for Possible Loan Losses
The 1996 six month provision for loan losses of $201 thousand compares to
the 1995 number of $199 thousand. The second quarter provision for loan
losses was $101 thousand for 1996 and $100 thousand for 1995. The loan
loss reserve to total loans increased from 1.20% on June 30, 1995 to 1.27%
as of June 30, 1996. Management feels the current loan loss reserve is
sufficient to meet future loan problems.
Part II - Other Information
Item 1. Legal Proceedings
The Company is not a party to any material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits as required by Item 601 of Regulation S-B.
27 Financial Data Schedule
2. No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused the report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Bourbon Bancshares, Inc.
Date __________________ _________________________________
Buckner Woodford, President and C.E.O.
Date __________________ _________________________________
Gregory J. Dawson, Chief Financial Office
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 6356
<INT-BEARING-DEPOSITS> 1631
<FED-FUNDS-SOLD> 2975
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62619
<INVESTMENTS-CARRYING> 15892
<INVESTMENTS-MARKET> 16344
<LOANS> 155499
<ALLOWANCE> 1974
<TOTAL-ASSETS> 255807
<DEPOSITS> 213185
<SHORT-TERM> 4175
<LIABILITIES-OTHER> 1939
<LONG-TERM> 12945
0
0
<COMMON> 8520
<OTHER-SE> 15043
<TOTAL-LIABILITIES-AND-EQUITY> 255807
<INTEREST-LOAN> 6749
<INTEREST-INVEST> 2571
<INTEREST-OTHER> 298
<INTEREST-TOTAL> 9618
<INTEREST-DEPOSIT> 4383
<INTEREST-EXPENSE> 4936
<INTEREST-INCOME-NET> 4682
<LOAN-LOSSES> 201
<SECURITIES-GAINS> 29
<EXPENSE-OTHER> 3723
<INCOME-PRETAX> 1765
<INCOME-PRE-EXTRAORDINARY> 1765
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1347
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
<YIELD-ACTUAL> 3.80
<LOANS-NON> 60
<LOANS-PAST> 1090
<LOANS-TROUBLED> 191
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1860
<CHARGE-OFFS> 114
<RECOVERIES> 27
<ALLOWANCE-CLOSE> 1974
<ALLOWANCE-DOMESTIC> 1974
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
