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 March 31, 1997
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 April 30, 1997: 1,392,054.
<PAGE>
BOURBON BANCSHARES, INC.
Table of Contents
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income
Three Months Ending March 31, 1997 & 1996 4
Consolidated Statements of Cash Flows
Three Months Ending March 31, 1997 & 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II - Other Information 10
Signatures 10
<PAGE>
Item 1 - Financial Statements
BOURBON BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET (unaudited)
(thousands) 3/31/97 12/31/96
Assets
Cash & Due From Banks 7,701 9,116
Federal Funds Sold 4,925 75
Total Cash & Cash Equivalents 12,626 9,191
Investment Securities:
Securities Held to Maturity 16,564 16,314
Securities Available for Sale 68,855 76,227
Federal Home Loan Bank Stock 2,752 2,706
Loans $162,512 $159,664
Reserve for Loan Losses 2,194 2,101
Net Loans $160,318 $157,563
Premises and Equipment 5,360 5,004
Other Assets 5,091 5,448
Total Assets $271,566 $272,453
Liabilities & Stockholders' Equity
Deposits
Demand 31,325 32,490
Savings & Interest Checking 79,310 79,886
Certificates of Deposit 116,922 118,695
Total Deposits $227,557 $231,071
Repurchase Agreements 4,896 2,836
Federal Home Loan Bank Advances 10,468 10,534
Other Borrowed Funds 1,816 1,324
Other Liabilities 2,094 2,055
Total Liabilities $246,831 $247,820
Stockholders' Equity
Common Stock 6,130 6,392
Retained Earnings 18,776 18,240
Net Unrealized Gains (Losses) on Investment
Securities (171) 1
Total Stockholders' Equity 24,735 24,633
Total Liabilities & Stockholders' Equity $271,566 $272,453
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT
(unaudited)
(thousands, except per share amounts)
Three Months Ending
3/31/97 3/31/96
INTEREST INCOME:
Loans, including fees $ 3,542 $ 3,326
Investment Securities 1,321 1,318
Other 112 180
Total Interest Income $ 4,975 $ 4,824
INTEREST EXPENSE:
Deposits $ 2,229 $ 2,220
Other 231 304
Total Interest Expense $ 2,460 $ 2,524
Net Interest Income $ 2,515 $ 2,300
Loan Loss Provision 106 100
Net Interest Income After $ 2,409 $ 2,200
Provision
OTHER INCOME:
Service Charges $ 431 $ 407
Securities Gains (Losses) 3 7
Other 122 93
Total Other Income $ 556 $ 507
OTHER EXPENSES:
Salaries and Benefits $ 1,043 $ 961
Occupancy Expenses 259 233
Other 633 685
Total Other Expenses $ 1,935 $ 1,879
Income Before Taxes $ 1,030 $ 828
Income Taxes 241 189
Net Income $ 789 $ 639
Primary earnings per share $ 0.55 $ 0.44
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands)
Three Months Ending
3/31/97 3/31/96
Cash Flows From Operating Activities
Net Income 789 639
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 126 181
Amortization 102 -
Investment securities (accretion) amortization, net 25 5
Provision for loan losses 106 101
Deferred Income Taxes 11 -
Investment securities losses (gains), net (3) (8)
Originations of loans held for sale (1,926) (2,693)
Proceeds from sale of loans 3,601 2,461
Capitalization of Mortgage Servicing Rights (37) -
Losses (gains) on sale of fixed assets - -
Losses (gains) on sale of loans (15) (2)
Losses (gains), including write-downs, on real
estate acquired through foreclosure, net - -
Changes in:
Interest receivable 288 (52)
Income taxes refundable 66 (27)
Other assets 34 305
Interest payable 52 (18)
Income taxes payable 166 231
Other liabilities (178) (10)
Net cash provided by operating activities 3,207 1,113
Cash Flows From Investing Activities
Purchases of securities available for sale (5,035) $(14,206)
Proceeds from sales of securities available for sale 3,504 4,007
Proceeds from principal payments, maturities and
calls of securities available for sale 8,574 14,740
Purchase of securities held to maturity (250) (725)
Proceeds from sales, principal payments, maturities
and calls of securities held to maturity - 500
Net change in loans (4,540) 2,309
Purchases of bank premises and equipment (482) (240)
Proceeds from the sale of bank premises and equipment - -
Proceeds from sales of real estate acquired through
foreclosure - 57
Net cash provided by investing activities 1,771 6,442
Cash Flows From Financing Activities:
Net change in deposits (3,514) 2,032
Net change in securities sold under agreements to
repurchase and federal funds purchased 2,060 (8,004)
Advances from Federal Home Loan Bank - -
Payments on Federal Home Loan Bank advances (66) (5,062)
Net change in other borrowed funds 392 723
Proceeds from note payable 200 -
Payment on note payable (100) (150)
Repurchase of common stock (290) -
Proceeds from issuance of common stock 28 -
Dividends paid (253) (229)
Net cash provided by financing activities (1,543) $(10,690)
Net increase (decrease) in cash and cash equivalents 3,435 (3,135)
Cash and cash equivalents at beginning of period 9,191 11,046
Cash and cash equivalents at end of period 12,626 7,911
<PAGE>
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
three month period ended March 31, 1997 and March 31, 1996
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 March
31, 1997 was $0.18 compared to $0.16 on March 31, 1996.
This first quarter dividend was an increase of $0.02 from
the fourth quarter of 1996.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
Bourbon Bancshares, Inc. recorded net income of $789
thousand, or $0.55 per share on a primary basis for the
first three months ended March 31, 1997. These results
increased 23.5% from the net income of $639 thousand or
$0.45 share on a primary basis for 1996.
Return on average assets was 1.17% for the first three
months ended March 31, 1997 compared to 0.97% for the same
time period in 1996. Return on average equity was 12.8% and
10.7% for the three months ended March 31, 1997 and 1996,
respectively. The previously mentioned return numbers were
both up 20% in 1997 compared to 1996.
Net Interest Income
Net interest income was $2,515 thousand for the three months
ended March 31, 1997 compared to $2,300 thousand in 1996,
resulting in an increase of $215 thousand or 9.3%. Loans
account for the improvement in interest income. Average
loans are up over $4 million from 1996 to 1997 resulting in
an improvement in interest income of $216 thousand. Average
deposits also improved from 1996 to 1997, up over $9
million. Although the volume was higher, interest expense
for the relative time periods remained virtually unchanged.
Non-Interest Income
Non-interest income increased for the three month period
ended March 31 from $507 thousand in 1996 to $556 thousand
in 1997. An increase of $24 thousand in service charges
from 1996 to 1997 and a $29 thousand increase in other
income from 1996 to 1997 was offset by a $4 thousand
decrease in net gains on securities. Income derived from
overdrafts improved $26 thousand from 1996 to 1997 to
account for the growth in service charges. Improvement in
other income is mainly attributable to an increase in trust
income of $16 thousand and net gains on loans sold of $11
thousand from 1996 to 1997.
<PAGE>
Non-Interest Expense
The explanations for the increase of $56 thousand in non-
interest expenses from $1,879 thousand for the three months
ended March 31, 1996 to $1,935 thousand for the same period
in 1997. Salaries and benefits increased $82 thousand for
the first three months of 1996 to 1997, an increase of 8.5%.
Additional officer staffing was added to various regions,
along with routine salary increases and increased cost of
benefits have resulted in higher costs for 1997 compared to
1996. Occupancy expense increased $26 thousand for the
first three months of 1997 compared to 1996. This increase
is mainly attributable to improved facilities and equipment.
Depreciation is up $17 thousand and smaller equipment
purchased increased $8 thousand from the first quarter of
1996 to 1997. Other expenses for the first quarter of 1997
compared to 1996 decreased $52 thousand, from $685 thousand
to $633 thousand. Savings from the conversion of the
savings institutions into branches of Kentucky Bank during
1996 are occurring during 1997. Savings from supplies, OTS
assessments, data processing and FDIC insurance premiums
have amounted to over $58 thousand through the first three
months of 1997 compared to 1996.
Income Taxes
The tax equivalent rate for the three months ended March 31,
1997 and March 31, 1996 was 23% for both periods. 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 increase of cash and cash
equivalents for the first three months of 1997 of $3,435
thousand and a decrease of $3,135 thousand for the same
period in 1996. In 1997, proceeds from principal payments,
sales, calls and maturities of securities exceeded purchases
by nearly $7 million. This was offset by an increase in
loans of $4.5 million and a decrease in deposits of $3.5
million. In addition, the proceeds from the sale of loans
exceeded the originations of loans by $1.7 million and there
was a increase in repurchase agreements and fed funds
purchased of over $2 million. During 1996, $5,062 thousand
was repaid on Federal Home Loan Bank advances and securities
sold under agreements to repurchase decreased by $8,004
thousand. These decreases in cash were offset in 1996 by
cash provided by operating activities and investing
activities. Management believes there is sufficient
liquidity to meet all reasonable borrower, depositor and
creditor needs in the present economic environment.
<PAGE>
Non-Performing Assets
As of March 31, 1997, the Company's non-performing assets
totaled $380 thousand or 0.2% of loans compared to $914
thousand or 0.6% of loans in 1996. (See table below) The
reduction was mainly due to loans that were ultimately taken
into Other Real Estate and subsequently sold during the
second quarter of 1997 at a loss of $23 thousand. Real
estate loans composed over 52% and over 87% of the non-
performing loans as of March 31, 1997 and 1996,
respectively. Lost interest income on the non-accrual loans
for both 1997 and 1996 is immaterial.
Nonperforming Assets
March 31
(in thousands)
1997 1996
Non-accrual Loans 93 91
Accruing Loans which are
Contractually past due
90 days or more 287 823
Restructured Loans - -
Total Nonperforming and Restructured 380 914
Other Real Estate 79 -
Total Nonperforming and Restructured
Loans and Other Real Estate 459 914
Nonperforming and Restructured Loans
as a Percentage of Net Loans 0.23% 0.57%
Nonperforming and Restructured Loans
and Other Real Estate as a Percentage
of Total Assets 0.17% 0.34%
<PAGE>
Provision and Reserve for Possible Loan Losses
The 1997 three month provision for loan losses of $106
thousand compares to the 1996 number of $100 thousand. As
depicted in the table below, the loan loss reserve to total
loans increased from 1.22% on March 31, 1996 to 1.35% as of
March 31, 1997. Net charge-offs for the periods mentioned
above have been relatively insignificant. Management feels
the current loan loss reserve is sufficient to meet future
loan problems.
Loan Losses
Quarter Ended March 31
(in thousands)
1997 1996
Balance at Beginning of Period 2,101 1,860
Amounts Charged-off:
Commercial
Real Estate Construction
Real Estate Mortgage
Agricultural
Consumer 27 23
Total Charged-off Loans 27 23
Recoveries on Amounts
Previously Charged-off:
Commercial 1 1
Real Estate Construction
Real Estate Mortgage
Agricultural
Consumer 13 13
Total Recoveries 14 14
Net Charge-offs 13 9
Provision for Loan Losses 106 100
Balance at End of Period 2,194 1,951
Total Loans, Net of Unearned Income
Average 159,756 152,063
At March 31 162,512 159,664
As a Percentage of Average Loans:
Net Charge-offs 0.01% 0.01%
Provision for Loan Losses 0.07% 0.07%
Allowance as a Percentage of
Period-end Net Loans 1.35% 1.22%
Allowance as a Multiple of
Net Charge-offs 168.8 216.8
<PAGE>
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 Officer
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