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 September 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)
Registrant's 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
November 12, 1996: 1,415,699
BOURBON BANCSHARES, INC.
Table of Contents
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income
Nine Months Ending September 30, 1996 & 1995 4
Three Months Ending September 30, 1996 & 1995 5
Consolidated Statements of Cash Flows
Nine Months Ending September 30, 1996 & 1995 6
Three Months Ending September 30, 1996 & 1995 7
Notes to Consolidated Financial Statements 8
Item 2. Management's 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>
9/30/9612/31/95
Assets
<S> <C> <C>
Cash & Due From Banks $ 7,264 $ 8,197
Federal Funds Sold 1,175 2,850
Total Cash & Cash Equivalents $ 8,439 $ 11,047
Investment Securities:
Securities Held to Maturity 16,498 16,455
Securities Available for Sale 63,777 76,184
Federal Home Loan Bank Stock 2,659 2,741
Loans $ 158,595 $ 155,061
Reserve for Loan Losses 2,026 1,860
Net Loans $ 156,569 $ 153,201
Premises and Equipment 4,888 4,176
Other Assets 5,831 5,627
Total Assets $ 258,661 $ 269,431
Liabilities & Stockholders' Equity
Deposits
Demand $ 28,492 $ 26,636
Savings & Interest Checking 67,743 57,340
Certificates of Deposit 120,390 129,373
Total Deposits $ 216,625 $ 213,349
Repurchase Agreements 3,187 4,660
Federal Funds Purchased - 5,700
Federal Home Loan Bank Advances 10,599 19,071
Other Borrowed Funds 2,109 1,431
Other Liabilities 2,219 2,053
Total Liabilities $ 234,739 $ 246,264
Stockholders' Equity
Common Stock $ 8,252 $ 6,482
Retained Earnings 15,826 16,674
Net Unrealized Gains (Losses) on Investment Securities (156) 11
Total Stockholders' Equity $ 23,922 $ 23,167
Total Liabilities & Stockholders' Equity $ 258,661 $ 269,431
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT (unaudited)
(thousands, except per share amounts)
<CAPTION>
Nine Months Ending 9/30/969/30/95
INTEREST INCOME:
<S> <C> <C>
Loans, including fees $ 10,240 $ 10,090
Investment Securities 3,916 4,362
Other 292 292
Total Interest Income $ 14,448 $ 14,744
INTEREST EXPENSE:
Deposits $ 6,555 $ 6,602
Other 800 1,280
Total Interest Expense $ 7,355 $ 7,882
Net Interest Income $ 7,093 $ 6,862
Loan Loss Provision 301 304
Net Interest Income After Provision $ 6,792 $ 6,558
OTHER INCOME:
Service Charges $ 1,065 $ 1,158
Securities Gains (Losses) 29 (23)
Other 490 363
Total Other Income $ 1,584 $ 1,498
OTHER EXPENSES:
Salaries and Benefits $ 2,966 $ 2,861
Occupancy Expenses 655 664
Other 2,164 2,185
Total Other Expenses $ 5,785 $ 5,710
Income Before Taxes $ 2,591 $ 2,346
Income Taxes 613 515
Net Income $ 1,978 $ 1,831
Primary earnings per share $ 1.37 $ 1.28
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT (unaudited)
(thousands, except per share amounts)
<CAPTION>
Three Months Ending 9/30/969/30/95
INTEREST INCOME:
<S> <C> <C>
Loans, including fees $ 3,491 $ 3,551
Investment Securities 1,345 1,487
Other (6) (3)
Total Interest Income $ 4,830 $ 5,035
INTEREST EXPENSE:
Deposits $ 2,172 $ 2,278
Other 247 448
Total Interest Expense $ 2,419 $ 2,726
Net Interest Income $ 2,411 $ 2,309
Loan Loss Provision 100 105
Net Interest Income After Provision $ 2,311 $ 2,204
OTHER INCOME:
Service Charges $ 344 $ 410
Securities Gains (Losses) - (38)
Other 233 79
Total Other Income $ 577 $ 451
OTHER EXPENSES:
Salaries and Benefits $ 1,021 $ 922
Occupancy Expenses 203 207
Other 838 683
Total Other Expenses $ 2,062 $ 1,812
Income Before Taxes $ 826 $ 843
Income Taxes $ 195 $ 194
Net Income $ 631 $ 649
Primary earnings per share $ 0.44 $ 0.45
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)
<CAPTION>
Nine Months Ending 9/30/969/30/95
Cash Flows From Operating Activities
<S> <C> <C>
Net Income $ 1,978 $ 1,831
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 328 310
Amortization 273 296
Investment securities (accretion) amortization, net 128 (41)
Provision for loan losses 301 299
Investment securities losses (gains), net (29) 23
Originations of loans held for sale (20,302) (15,106)
Proceeds from sale of loans 25,585 12,726
Losses (gains) on sale of fixed assets - (11)
Losses (gains) on sale of loans (4) (55)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net - (90)
Adjustment to conform with pooled Companies' year end - (174)
Changes in:
Interest receivable (355) (573)
Income taxes refundable - 194
Other assets (36) 102
Interest payable 113 279
Income taxes payable 126 -
Other liabilities (72) (963)
Net cash provided by operating activities $ 8,034 $ (953)
Cash Flows From Investing Activities
Purchases of securities available for sale $ (26,256) $ (6,650)
Proceeds from sales of securities available for sale 7,248 11,605
Proceeds from principal payments, maturities and
calls of securities available for sale 31,141 8,091
Purchase of securities held to maturity (1,375) (5,033)
Proceeds from sales, principal payments, maturities
and calls of securities held to maturity 1,335 3,556
Net change in loans (9,005) (7,280)
Purchases of bank premises and equipment (1,040) (192)
Proceeds from the sale of bank premises and equipment - 100
Proceeds from sales of real estate acquired through
foreclosure 57 385
Net cash provided by investing activities $ 2,105 $ 4,582
Cash Flows From Financing Activities:
Net change in deposits $ 3,276 $ (11,139)
Net change in securities sold under agreements to
repurchase and federal funds purchased (7,173) 1,781
Advances from Federal Home Loan Bank 400 2,000
Payments on Federal Home Loan Bank advances (8,872) (1,404)
Net change in other borrowed funds 948 785
Proceeds from note payable 330 -
Payment on note payable (600) (750)
Repurchase of common stock (369) -
Proceeds from issuance of common stock 1 46
Dividends paid (688) (591)
Net cash provided by financing activities $ (12,747) $ (9,272)
Net increase (decrease) in cash and cash equivalents $ (2,608) $ (5,643)
Cash and cash equivalents at beginning of period 11,047 15,433
Cash and cash equivalents at end of period $ 8,439 $ 9,790
</TABLE>
<TABLE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)
<CAPTION>
Three Months Ending 9/30/969/30/95
Cash Flows From Operating Activities
<S> <C> <C>
Net Income $ 631 $ 649
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 109 103
Amortization 91 99
Investment securities (accretion) amortization, net 61 (16)
Provision for loan losses 100 100
Investment securities losses (gains), net - 15
Originations of loans held for sale (13,876) (8,229)
Proceeds from sale of loans 19,398 5,818
Losses (gains) on sale of fixed assets - -
Losses (gains) on sale of loans (9) (24)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net - -
Adjustment to conform with pooled Companies' year end - (174)
Changes in:
Interest receivable (192) (884)
Income taxes refundable - 45
Other assets (81) 603
Interest payable (15) (2)
Income taxes payable 71 -
Other liabilities 462 268
Net cash provided by operating activities $ 6,750 $ (1,629)
Cash Flows From Investing Activities
Purchases of securities available for sale $ (5,028) $ (3,808)
Proceeds from sales of securities available for sale - 1,994
Proceeds from principal payments, maturities and
calls of securities available for sale 4,084 3,671
Purchase of securities held to maturity (650) (4,213)
Proceeds from sales, principal payments, maturities
and calls of securities held to maturity 45 2,911
Net change in loans (8,714) (1,664)
Purchases of bank premises and equipment (489) (48)
Proceeds from the sale of bank premises and equipment - -
Proceeds from sales of real estate acquired through
foreclosure - -
Net cash provided by investing activities $ (10,752) $ (1,157)
Cash Flows From Financing Activities:
Net change in deposits $ 3,203 $ (3,452)
Net change in securities sold under agreements to
repurchase and federal funds purchased 1,062 6,063
Advances from Federal Home Loan Bank 400 -
Payments on Federal Home Loan Bank advances (2,746) (1,282)
Net change in other borrowed funds 29 (5)
Proceeds from note payable 330 -
Payment on note payable (300) (150)
Repurchase of common stock (270) -
Proceeds from issuance of common stock 1 -
Dividends paid (230) (181)
Net cash provided by financing activities $ 1,479 $ 993
Net increase (decrease) in cash and cash equivalents $ (2,523) $ (1,793)
Cash and cash equivalents at beginning of period 10,962 11,583
Cash and cash equivalents at end of period $ 8,439 $ 9,790
</TABLE>
BOURBON BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In Management's 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 nine month and three month periods ended September 30, 1996 and September
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 September 30, 1996 was
$0.16 compared to $0.15 on September 30, 1995. This third quarter dividend
was the same as was paid for the first and second quarters of 1996 and 1995.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Summary
Bourbon Bancshares, Inc. recorded net income of $1,978 thousand, or $1.37 per
share on a primary basis for the first nine months ended September 30, 1996.
These results compare to net income of $1,831 thousand or $1.28 share on a
primary basis for 1995. Third quarter's net income was $631 thousand or
$0.44 per share on a primary basis for 1996 compared to $649 thousand or
$0.45 per share on a primary basis in 1995.
Return on average assets was 1.01% for the first nine months ended
September 30, 1996 compared to 0.91% for the same time period in 1995.
Third quarter's return on average assets was 0.97% for 1996
and 0.96% for 1995. Return on average equity was 11.2% and 11.4% for the nine
months ended September 30, 1996 and 1995, respectively. The three months
ended September 30 revealed a return on average equity of 10.6% and 13.4%
for 1996 and 1995, respectively.
Net Interest Income
Net interest income was $7,093 thousand for the nine months ended
September 30, 1996 compared to $6,862 thousand in 1995, resulting in an
increase of $231 thousand or 3.4%. For the three months ended
September 30, net interest income was $2,411 and $2,309 in 1996 and 1995,
respectively.
Non-Interest Income
Non-interest income increased for the nine month period ended September 30
from $1,498 thousand in 1995 to $1,584 thousand in 1996. A decrease of $93
thousand in service charges from 1995 to 1996 was offset by a $52 thousand
increase in net gains on securities and a $127 thousand increase in other
income from 1995 to 1996. For the three month period ended September 30,
1996 compared to the same period in 1995, service charges decreased $66
thousand, while net security gains increased $38 thousand and
other income increased $154 thousand. During the first nine months of 1996,
trust fees have decreased $14 thousand from 1995. In addition, gains on
loans sold amounted to $55 thousand through September 30, 1995, while gains
of $4 thousand were incurred during this time period in 1996.
Non-Interest Expense
The explanations for the increase of $75 thousand in non-interest expenses
from $5,710 thousand for the nine months ended September 30, 1995 to $5,785
thousand for the same period in 1996, and the increase of $250 thousand for
the third quarter of 1996 compared to 1995 follows. Salaries and benefits
increased $105 thousand for the first nine months of 1995 to 1996, nearly a
4% increase. In 1995 an annuity amounting to over $57 thousand was
purchased for a former manager of a savings association. In the third
quarter of 1996, an employee bonus amounting to nearly $32 thousand was
earned. Occupancy expense decreased $9 thousand for the first nine months of
1996 compared to 1995. For the first nine months of 1996 compared to 1995,
other expenses decreased $21 thousand. Other expenses for the third
quarter of 1996 compared to 1995 increased $155 thousand, from $683 thousand
to $838 thousand. Within other expenses, the savings resulting from the
decrease in FDIC insurance for commercial banks amounted to nearly $170
thousand for the first nine months of 1996 compared to 1995. However,
this savings was more than offset by the one-time SAIF assessment amounting
to nearly $303 thousand accrued during the third quarter of 1996. In
addition, net gains from the sale of other real estate of $90 thousand
were recorded in 1995.
Income Taxes
The tax equivalent rate for the nine months ended September 30, 1996 and
September 30, 1995 was 24% and 22%, respectively. The rates for the three
months ended September 30, 1996 and 1995 were 24% and 23%, 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 nine months of
1996 of $2,608 thousand and $5,643 thousand for the same period in 1995.
In 1995, this is primarily attributable to a decrease in deposits of $11,139
thousand, a decrease in securities of $11,569 thousand and a increase in
total loans of $9,660 thousand. During 1996, $8,872 thousand was repaid on
Federal Home Loan Bank advances and securities sold under agreements
to repurchase decreased by $7,173 thousand. These decreases in cash were
offset in 1996 and 1995 by cash provided by operating activities and
investing activities. The decreases for the third quarter of 1996
in cash and cash equivalents of $2,523 in 1996 and $1,793 in 1995 were
mainly attributable to cash outflows from investing activities being than
balanced out with net 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 September 30, 1996, the Company's non-performing assets totaled $1,074
thousand or 0.7% of loans compared to $654 thousand or 0.4% of loans in
1995. Real estate loans composed over 91% and over 88% of the
non-performing loans as of September 30, 1996 and 1995, respectively.
Provision and Reserve for Possible Loan Losses
The 1996 nine month provision for loan losses of $301 thousand compares to the
1995 number of $304 thousand. The third quarter provision for loan losses
was $100 thousand for 1996 and $105 thousand for 1995. The loan loss
reserve to total loans increased from 1.16% on September 30, 1995 to 1.28%
as of September 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>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7264
<INT-BEARING-DEPOSITS> 611
<FED-FUNDS-SOLD> 1175
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 63777
<INVESTMENTS-CARRYING> 16498
<INVESTMENTS-MARKET> 17096
<LOANS> 158595
<ALLOWANCE> 2026
<TOTAL-ASSETS> 258661
<DEPOSITS> 216625
<SHORT-TERM> 5296
<LIABILITIES-OTHER> 2219
<LONG-TERM> 10599
0
0
<COMMON> 8252
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</TABLE>
