UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2000
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: (859)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 May 1, 2000: 2,817,731.
<PAGE>
BOURBON BANCSHARES, INC.
Table of Contents
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statement of Income and Comprehensive Income
Three Months Ending March 31, 2000 & 1999 4
Consolidated Statements of Cash Flows
Three Months Ending March 31, 2000 & 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Part II - Other Information 14
Signatures 14
Exhibits
3.1 Articles of Incorporation of the Registrant (as
amended and restated) dated May 6, 1993 and as
amended on March 27, 1994 and on June 10, 1999 15
11 Earnings Per Share Calculation 29
27 Financial Data Schedule 29
<PAGE>
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS (unaudited)
(thousands) 3/31/00 12/31/99
Assets
Cash and due from banks $ 9,243 $ 20,042
Federal funds sold 2,168 675
Cash and cash equivalents 11,411 20,717
Investment securities:
Available for sale 54,252 54,930
Held to maturity 15,848 15,693
Mortgage loans held for sale 3,508 3,494
Loans 241,996 238,607
Allowance for loan losses 3,268 3,103
Net loans 238,728 235,504
Federal home loan bank stock 3,404 3,345
Bank premises and equipment, net 6,967 7,082
Interest receivable 3,346 3,454
Intangible assets 2,033 2,108
Other assets 469 1,152
Total assets $339,966 $347,479
Liabilities and Stockholders' Equity
Deposits
Non-interest bearing $ 42,359 $ 42,931
Savings and interest checking 91,744 94,907
Certificates of deposit 144,712 136,728
Total deposits 278,815 274,566
Securities sold under agreements to repurchase 7,952 10,331
Other borrowed funds 1,256 1,528
Federal home loan bank advances 16,484 26,592
Interest payable 2,450 2,142
Other liabilities 242 600
Total liabilities 307,199 315,759
Stockholders' equity
Common stock 6,621 6,491
Retained earnings 26,720 25,778
Accumulated other comprehensive income (574) (549)
Total stockholders' equity 32,767 31,720
Total liabilities & stockholders' equity $339,966 $347,479
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (unaudited)
(thousands, except per share amounts) Three Months Ending
3/31/00 3/31/99
INTEREST INCOME:
Loans, including fees $ 5,441 $ 4,480
Investment securities 1,026 969
Other 125 123
Total interest income 6,592 5,572
INTEREST EXPENSE:
Deposits 2,626 2,289
Other 398 232
Total interest expense 3,024 2,521
Net interest income 3,568 3,051
Loan loss provision 188 175
Net interest income after provision 3,380 2,876
OTHER INCOME:
Service charges 615 465
Loan service fee income 73 71
Trust department income 159 127
Investment securities gains, net (1) 7
Gain on sale of mortgage loans - 148
Other 81 41
Total other income 927 859
OTHER EXPENSES:
Salaries and employee benefits 1,325 1,195
Occupancy expenses 393 293
Amortization 108 104
Advertising and marketing 91 74
Taxes other than payroll, property and income 84 79
Other 520 426
Total other expenses 2,521 2,171
Income before taxes 1,786 1,564
Income taxes 478 445
Net income 1,308 1,119
Other Comprehensive Income, net of tax:
Change in Unrealized Gains on Securities (24) (63)
Comprehensive Income $ 1,284 $ 1,056
Earnings per share
Basic $ 0.47 $ 0.40
Diluted 0.46 0.39
<PAGE>
BOURBON BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands) Three Months Ending
3/31/00 3/31/99
Cash Flows From Operating Activities
Net Income $ 1,308 $ 1,119
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 195 150
Amortization 107 137
Investment securities (accretion) amortization, net (21) 2
Provision for loan losses 188 175
Investment securities losses (gains), net 1 (7)
Originations of loans held for sale (2,934) (8,722)
Proceeds from sale of loans 2,901 6,306
Gain on sale of mortgage loans - (148)
Changes in:
Interest receivable 109 438
Other assets 681 406
Interest payable 308 124
Other liabilities (358) (219)
Net cash provided by operating activities 2,485 (239)
Cash Flows From Investing Activities
Purchases of securities available for sale (6,338) (15,629)
Proceeds from sales of securities available for sale 2,000 4,847
Proceeds from principal payments, maturities and
calls of securities available for sale 4,939 10,037
Purchase of securities held to maturity (269) -
Proceeds from sales, principal payments, maturities
and calls of securities held to maturity 115 -
Net change in loans (3,412) 1,090
Purchases of bank premises and equipment, net (80) (174)
Net cash provided by investing activities (3,045) 171
Cash Flows From Financing Activities:
Net change in deposits 4,249 (234)
Net change in securities sold under agreements to
repurchase and other borrowings (2,651) (4,493)
Advances from Federal Home Loan Bank - 5,000
Payments on Federal Home Loan Bank advances (10,108) (74)
Proceeds from issuance of common stock 130 11
Purchase of common stock - (236)
Dividends paid (366) (309)
Net cash provided by financing activities (8,746) (335)
Net increase (decrease) in cash and cash equivalents (9,306) (403)
Cash and cash equivalents at beginning of period 20,717 10,756
Cash and cash equivalents at end of period $ 11,411 $ 10,353
<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 periods ended March 31, 2000 and March 31, 1999
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-K.
2. Basic earnings per common share is net income divided
by the weighted average number of common shares outstanding
during the period. Diluted earnings per common share
includes the dilutive effect of additional potential common
shares issuable under stock options. Earnings and dividends
per share are restated for all stock splits.
3. Dividends per share paid for the quarter ended March
31, 2000 were $0.13 compared to $0.11 on March 31, 1999.
4. As of July 15, 1999, the Company approved a two for one
stock split. Each shareholder received one additional share
for each share they held. Relative numbers have been
adjusted to reflect this change.
5. On August 13, 1999, Kentucky Bank acquired the Wilmore,
Kentucky branch of National City Bank. Included in the
purchase were $9.0 million in net deposits and $353,000 in
fixed assets. The net deposits assumed exceeded the cash
received by $287,000.
6. Beginning January 1, 2001, a new accounting standard
will require all derivatives to be recorded at fair value.
Unless designated as hedges, changes in these fair values
will be recorded in the income statement. Fair value
changes involving hedges will generally be recorded by
offsetting gains and losses on the hedge and on the hedged
item, even if the fair value of the hedged item is not
otherwise recorded. This is not expected to have a material
effect, but the effect will depend on derivative holdings
when this standard applies.
<PAGE>
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This discussion contains forward-looking statements under
the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties. Although the Company
believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be
no assurance that the forward-looking statements included
herein will prove to be accurate. Factors that could cause
actual results to differ from the results discussed in the
forward-looking statements include, but are not limited to:
economic conditions (both generally and more specifically in
the markets, including the tobacco market, in which the
Company and its bank operate); competition for the Company's
customers from other providers of financial and mortgage
services; government legislation and regulation (which
changes from time to time and over which the Company has no
control); changes in interest rates (both generally and more
specifically mortgage interest rates); material unforeseen
changes in the liquidity, results of operations, or
financial condition of the Company's customers; material
unforeseen complications related to addressing the Year 2000
problem experienced by the Company, its suppliers, customers
and governmental agencies; and other risks detailed in the
Company's filings with the Securities and Exchange
Commission, all of which are difficult to predict and many
of which are beyond the control of the Company. The Company
undertakes no obligation to republish revised
forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Summary
Bourbon Bancshares, Inc. recorded net income of $1.3
million, or $0.47 per share and $0.46 per share assuming
dilution for the first three months ended March 31, 2000
compared to $1.1 million, or $0.40 per share and $0.39 per
share assuming dilution for the three month period ending
March 31, 1999. The first three months reflects an increase
in net income of 17%. The per share amounts above have been
adjusted to reflect the 2 for 1 stock split effective in
July 1999.
Return on average assets was 1.51% for the first three
months ended March 31, 2000 compared to 1.45% for the same
time period in 1999, an increase of 4%. Return on average
equity was 16.3% and 15.2% for the three months ended March
31, 2000 and 1999, respectively, an increase of 7%.
Net Interest Income
Net interest income was $3.6 million for the three months
ended March 31, 2000 compared to $3.1 million in 1999,
resulting in an increase of $517 thousand or 16.9%. Loan
volume continues to improve. Year to date average loans are
up $28 million, or 13% from 1999 to 2000 resulting in an
increase in loan interest income of $961 thousand for the
first three months. Average deposits also increased from
1999 to 2000, up $16 million, or 6%. This increased volume
has resulted in an increase in deposit interest expense of
$337 thousand for the first three months.
<PAGE>
Non-Interest Income
Non-interest income increased for the three-month period
ended March 31 from $859 thousand in 1999 to $927 thousand
in 2000. For the quarter, an increase of $150 thousand in
service charges from 1999 to 2000 is mainly attributable to
an improvement in overdraft charges of $83 thousand. Trust
department income increased $32 thousand for the first
quarter of 2000 compared to the same period in 1999. The
reduction of loan gains of $148 thousand is attributable to
an increase in rates in 2000 as compared to 1999. The
reduction in rates resulted in a reduction of loan
originations and refinances. Due to the volatility of
rates, the level of activity and related income may continue
to decline. The increase in other income of $40 thousand in
the first quarter of 2000 as compared to the same time
period in 1999 is a result of an increase in debit and
credit card income of $40 thousand.
Non-Interest Expense
The explanations for the increase of $369 thousand in non-
interest expenses from $2.2 million for the three months
ended March 31, 1999 to $2.5 million for the same period in
2000 follows. Salaries and benefits increased $130 thousand
for the first three months of 2000 compared to 1999, an
increase of 10.9%. Salaries, excluding bonuses and
incentives, increased 6.7% from 1999 to 2000. Employee
benefits increased $75 thousand for this same period.
Occupancy expense increased $100 thousand to $393 thousand
for the first three months of 2000 compared to 1999.
Depreciation is up $45 thousand for the year. Building and
equipment maintenance was $47 thousand higher for the first
three months of 2000. These increases are a result on the
Company's continued emphasis on improving and maintaining
its facilities.
Advertising and Marketing costs increased $17 thousand for
the first three months of 2000 as compared to the same
period in 1999. Continued efforts have been made by the
Company to promote the name and the products of Kentucky
Bank. Other expenses for the first three months of 2000
compared to 1999 increased $94 thousand, from $426 thousand
to $520 thousand. The cost of maintaining repossessed
property was $15 thousand higher in the first quarter of
2000 compared to the same period in 1999. Losses from
checking accounts have also increased $26 thousand during
the first quarter of 2000 compared to the first quarter of
1999.
Income Taxes
The tax equivalent rate for the three months ended March 31
was 27% for 2000 and 28% for 1999. 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 three months of 2000 of $9.3
million compared to a decrease of $0.4 million for the same
period in 1999. In 2000, proceeds from the sale of loans
were $2.9 million compared to $6.3 million in 1999. Five
million dollars of 1999 loans were securitizations and of a
nonrecurring nature. Originations of loans held for sale
were $2.9 million and $8.7 million for the three months
ending March 31, 2000 and 1999, respectively.
For the first three months, proceeds from security
transactions have exceeded purchases by $447 thousand in
2000 whereas purchases exceeded proceeds by $700 thousand in
1999. Of these changes, principal payments on securities
have amounted to over $939 thousand in 2000 and over $2
million for the same period in 1999.
<PAGE>
During 2000, $10 million has been repaid to the Federal Home
Loan Bank (FHLB). In 1999, $5 million in advances were
received from the FHLB. Short-term borrowings decreased $3
million in 2000 and $4 million in 1999. Deposits increased
$4 million in 2000 and were relatively flat in 19998.
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 March 31, 2000, the Company's non-performing assets
totaled $1.8 million or 0.7% of loans compared to $1.1
million or 0.5% of loans in 1999. (See table below) Real
estate loans composed 97% and 74% of the non-performing
loans as of March 31, 2000 and 1999, respectively. Forgone
interest income on the non-accrual loans for both 2000 and
1999 is immaterial.
Nonperforming Assets
March 31
(in thousands)
2000 1999
Non-accrual Loans 168 315
Accruing Loans which are
Contractually past due
90 days or more 1,504 631
Restructured Loans 130 142
Total Nonperforming and Restructured 1,802 1,088
Other Real Estate 117 70
Total Nonperforming and Restructured
Loans and Other Real Estate 1,919 1,158
Nonperforming and Restructured Loans
as a Percentage of Loans 0.74% 0.51%
Nonperforming and Restructured Loans
and Other Real Estate as a Percentage
of Total Assets 0.56% 0.37%
<PAGE>
Provision and Reserve for Possible Loan Losses
The 2000 three-month provision for loan losses of $188
thousand is higher than the 1999 number of $175 thousand.
Loan growth has required management to increase the
provision in order to maintain a reserve for loan losses
that is representative of the risk of loss based on the
quality of loans currently in the portfolio. As depicted in
the table below, the loan loss reserve to total loans was
1.35% on March 31, 2000 and on March 31, 1999. 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
Three Months Ended March 31
(in thousands)
2000 1999
Balance at Beginning of Period 3,104 2,735
Amounts Charged-off:
Commercial - -
Real Estate Mortgage - -
Agricultural - 2
Consumer 50 41
Total Charged-off Loans 50 43
Recoveries on Amounts
Previously Charged-off:
Commercial 1 2
Real Estate Mortgage - -
Agricultural - -
Consumer 25 16
Total Recoveries 26 18
Net Charge-offs 24 25
Provision for Loan Losses 188 175
Balance at End of Period 3,268 2,885
Loans
Average 238,644 211,003
At March 31 241,996 214,192
As a Percentage of Average Loans:
Net Charge-offs 0.01% 0.01%
Provision for Loan Losses 0.08% 0.08%
Allowance as a Percentage of
Period-end Loans 1.35% 1.35%
Allowance as a Multiple of
Net Charge-offs 136.2 115.4
Allowance as a percentage of non-performing
And restructure loans 1.81 2.65
<PAGE>
Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Asset/Liability management control is designed to ensure
safety and soundness, maintain liquidity and regulatory
capital standards, and achieve acceptable net interest
income. Management considers interest rate risk to be the
most significant market risk. The Company's exposure to
market risk is reviewed on a regular basis by the
Asset/Liability Committee. Interest rate risk is the
potential of economic losses due to future interest rate
changes. These economic losses can be reflected as a loss
of future net interest income and/or a loss of current fair
market values. The objective is to measure the effect on
net interest income and to adjust the balance sheet to
minimize the inherent risk while at the same time maximize
income. Management realizes certain risks are inherent and
that the goal is to identify and minimize the risks. Tools
used by management include the standard GAP model and an
interest rate shock simulation model. The Bank has no
market risk sensitive instruments held for trading purposes.
The following table depicts the change in net interest
income resulting from 100 and 300 basis point changes in
rates. The projections are based on balance sheet growth
assumptions and repricing opportunities for new, maturing
and adjustable rate amounts. In addition, the projected
percentage changes from level rates are outlined below
within the Board of Directors specified limits. As of March
31, 2000 the projected percentage changes are within the
Board limits and the Company's interest rate risk is also
with Board limits. The projected net interest income report
summarizing the Company's interest rate sensitivity as of
March 31, 2000 is as follows:
(in thousands)
PROJECTED NET INTEREST INCOME
Level
Rate Change: - 300 - 100 Rates + 100 + 300
Year One (4/1/00 - 3/31/01)
Interest Income 24,429 26,586 27,667 28,747 30,907
Interest Expense 9,886 11,872 12,865 13,858 15,844
Net Interest Income 14,543 14,714 14,802 14,889 15,063
PROJECTED DOLLAR INCREASE (DECREASE) FROM "LEVEL RATES"
Year One (4/1/00 - 3/31/01)
Interest Income (3,238) (1,081) N/A 1,081 3,241
Interest Expense (2,979) (993) N/A 993 2,979
Net Interest Income (259) (88) N/A 88 262
PROJECTED PERCENTAGE INCREASE (DECREASE) FROM "LEVEL RATES"
Year One (4/1/00 - 3/31/01)
Interest Income -11.7% -3.9% N/A 3.9% 11.7%
Interest Expense -23.2% -7.7% N/A 7.7% 23.2%
Net Interest Income -1.7% -0.6% N/A 0.6% 1.8%
Limitation on % Change >-10.0% >-4.0% N/A >-4.0% >-10.0%
<PAGE>
These numbers are comparable to 1999. In 2000, year one
reflected a decline in net interest income of 1.7% with a
300 basis point decline compared to the 0.4% decline in
1999. The 300 basis point increase in rates reflected a
1.8% increase in net interest income in 2000 compared to
0.6% in 1999. Percentage changes in 2000 are greater than
1999 reflecting slightly greater vulnerability to drastic
shifts in interest rates.
Management measures the Company's interest rate risk by
computing estimated changes in net interest income in the
event of a range of assumed changes in market interest
rates. The Company's exposure to interest rates is reviewed
on a monthly basis by senior management and quarterly with
the Board of Directors. Exposure to interest rate risk is
measured with the use of interest rate sensitivity analysis
to determine the change in net interest income in the event
of hypothetical changes in interest rates, while interest
rate sensitivity gap analysis is used to determine the
repricing characteristics of the Company's assets and
liabilities. If estimated changes to net interest income
are not within the limits established by the Board, the
Board may direct management to adjust the Company's asset
and liability mix to bring interest rate risk within Board
approved limits.
In addition, the Company uses interest rate sensitivity gap
analysis to monitor the relationship between the maturity
and repricing of its interest-earning assets and interest-
bearing liabilities, while maintaining an acceptable
interest rate spread. Interest rate sensitivity gap is
defined as the difference between the amount of interest-
earning assets maturing or repricing within a specific time
period and the amount of interest-bearing liabilities
maturing or repricing within that time period. A gap is
considered positive when the amount of interest-rate-
sensitive assets exceeds the amount of interest-sensitive-
liabilities, and is considered negative when the amount of
interest-rate-sensitive liabilities exceeds the amount of
interest-rate-sensitive assets. Generally, during a period
of rising interest rates, a negative gap would adversely
affect net interest income, while a positive gap would
result in an increase in net interest income. Conversely,
during a period of falling interest rates, a negative gap
would result in an increase in net interest income, while a
positive gap would negatively affect net interest income.
The Company's goal is to maintain a reasonable balance
between exposure to interest rate fluctuations and earnings.
The interest rate sensitivity analysis as of March 31 shown
below depicts amounts based on the earliest period in which
they can normally be expected to reprice. The chart reveals
that assets and liabilities are fairly well matched for the
early periods specified below. The 2000 numbers reflect a
more negative position in the first two one-year time
buckets due to the amount of 5 year loans originated, and
deposits being generated, mainly with repricing
opportunities of less than 2 years. The decay rates used
for Demand deposits, NOW's, Savings and Money Market Savings
are 5%, 30%, 20% and 30%, respectively.
<PAGE>
<TABLE>
<CAPTION>
(in thousands)
Total 1 Year 2 Years 3 Years 4 Years 5 Years >5 Years
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Cash & Due From Banks 8,933 - - - - - 8,933
Fed Funds & Int-Earning Due from Banks 2,478 2,478 - - - - -
Investment Securities 70,100 34,052 13,422 5,261 2,289 3,017 12,059
Loans (including held for sale) 241,996 103,517 32,943 40,208 38,853 24,120 2,355
Others Assets 16,459 - - - - - 16,459
Total Assets / Repricing Assets 339,966 140,047 46,365 45,469 41,142 27,137 39,806
Repricing Assets - Accumulated 140,047 186,412 231,881 273,023 300,160 339,966
% of Current Balance 41.2% 13.6% 13.4% 12.1% 8.0% 11.7%
% of Current Balance - Accumulated 41.2% 54.8% 68.2% 80.3% 88.3% 100.0%
LIABILITIES
Total Deposits 278,815 158,896 35,985 15,252 11,074 8,533 49,075
Variable Rate Other Liabilities 8,457 8,457 - - - - -
Fixed Rate Other Liabilities 17,235 1,207 226 239 10,506 5,018 39
Other Liabilities 2,692 - - - - - 2,692
Total Capital 32,767 - - - - - 32,767
Total Liabilities / Rericing Liab 339,966 168,560 36,211 15,491 21,580 13,551 84,573
Repricing Liabilities - Accumulated 168,560 204,771 220,262 241,842 255,393 339,966
% of Current Balance 49.6% 10.7% 4.6% 6.3% 4.0% 24.9%
% of Current Balance - Accum 49.6% 60.2% 64.8% 71.1% 75.1% 100.0%
SUMMARY
Total Repricing Assets 140,047 46,365 45,469 41,142 27,137 39,806
Total Repricing Liabilities 168,560 36,211 15,491 21,580 13,551 84,573
Total Repricing Gap (by bucket) (28,513) 10,154 29,978 19,562 13,586 (44,767)
Total Repricing Assets - Cumulative 320,864 140,047 186,412 231,881 273,023 300,160 339,966
Total Repricing Liabilities - Cum 305,705 168,560 204,771 220,262 241,842 255,393 339,966
Repricing Gap - Cumulative 15,159 (28,513) (18,359) 11,619 31,181 44,767 -
Gap/Total Assets (by Bucket) -8.39% 2.99% 8.82% 5.75% 4.00% -13.17%
Cumulative Gap/Total Assets -8.39% -5.40% 3.42% 9.17% 13.17% 0.00%
</TABLE>
<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.
3.1 Articles of Incorporation of the Registrant (as amended
and restated) dated May 6, 1993 and as amended March 27,
1994 and June 10, 1999
11 Earnings Per Share Calculation
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 __5/12/00_________ __/s/Buckner Woodford____________
Buckner Woodford, President and C.E.O.
Date __5/12/00_________ __/s/Gregory J. Dawson___________
Gregory J. Dawson, Chief Financial Officer
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED ARTICLES OF INORPORATION
OF
BOURBON BANCSHARES, INC.
Pursuant to the provisions of KRS 271B.10-060 and .10-070,
Bourbon Bancshares, Inc. (the "Corporation") amends and
restates its Articles of Incorporation and in connection
with these Amended and Restated Articles of Incorporation
certifies the following:
1. The name of the corporation is Bourbon Bancshares, Inc.
2. The complete text of the Corporation's Articles of
Incorporation, as amended and restated, is set forth on
Exhibit A hereto.
3. The Amended and Restated Articles of Incorporation
contain amendments to the Corporation's Articles of
Incorporation requiring shareholder approval. On May 3,
1993, these amendments were approved by the shareholders of
the Corporation at a meeting at which 581,210 Common Shares
(the only outstanding class of shares of the Corporation)
were entitled to be voted on the amendments, 473,686 Common
Shares were indisputably represented at the meeting and
469,021 Common Shares were voted in favor of the amendments,
representing a number of votes sufficient for approval by
the shareholders of the Corporation.
DATED: May 6, 1993
BOURBON BANCSHARES, INC.
By: __/s/Buckner Woodford____
Buckner Woodford, President
This Instrument Prepared By:
/s/David W. Harper____
David W. Harper
HIRN REED & HARPER
2000 Meidinger Tower
Louisville, KY 40202
(502)585-2450
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BOURBON BANCSHARES, INC.
ARTICLE I
Name
The Corporation's name shall be Bourbon Bancshares, Inc.
ARTICLE II
Duration
The Corporation's duration shall be perpetual.
ARTICLE III
Purposes
The Corporation's purposes shall be to transact any and
all lawful business for which corporations may be incorpo
rated under the Kentucky Business Corporation Act ("KBCA"),
as from time to time in existence or replaced by any
successor Act.
ARTICLE IV
Authorized Shares
The total number of shares that the Corporation shall
have the authority to issue is 1,800,000 shares, which shall
be divided into two classes as follows:
1,500,000 Common Shares; and
300,000 Preferred Shares.
The designations, voting powers and relative rights and
preferences of the shares shall be as follows:
A. Common Shares.
1. Powers, Rights and Preferences. The Common
Shares shall be without distinction as to powers, rights and
preferences. Except as may be provided by the Board of
Directors in a designation of any series of Preferred Shares
(in accordance with the provisions of Paragraph B of Article
IV) or as otherwise declared by law, the Common Shares shall
have the exclusive right to vote for the election of direc
tors and on all other matters in which shareholders are
generally entitled to vote. Except with respect to the
election of directors (where cumulative voting is required),
each of the Common Shares shall have one vote per share
(which vote may not be split into fractional votes) on
matters on which holders of Common Shares are entitled to
vote.
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2. Dividends. After the requirements with
respect to preferential dividends on Preferred Shares (fixed
in accordance with the provisions of Paragraph B of Article
IV), if any, have been met and after the Corporation has
complied with any requirements for setting aside sums as
sinking funds or redemption or purchase accounts and subject
further to any other conditions that may be established in
accordance with the provisions of Paragraph B of Article IV,
the holders of Common Shares shall be entitled to receive
such dividends, if any, as may be declared from time to time
by the Board of Directors.
3. Distributions on Common Shares. After
distribution in full of any preferential amount (as may be
fixed in accordance with the provisions of Paragraph B of
Article IV) to be distributed to the holders of Preferred
Shares, and subject to any further rights of the holders of
Preferred Shares to participate in a liquidation,
distribution or sale of assets, dissolution or winding-up of
the Corporation, the holders of Common Shares shall be
entitled to receive, upon the voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up of the Corporation, all of its remaining assets,
tangible and intangible, of whatever kind available for
distribution to the shareholders, ratably in proportion to
the number of Common Shares held by each.
4. Issuance of Common Shares. Common Shares may
be issued from time to time as the Board of Directors shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
B. Preferred Shares.
1. Issuance by Board Resolutions; Series. The
Board of Directors of the Corporation shall have authority
by resolution to issue from time to time Preferred Shares in
one or more series. Each series shall be distinctly desig
nated by number, letter or title. All shares of any one
series of Preferred Shares shall be alike in every particu
lar. The powers, preferences and voting, relative, partici
pating, optional and other rights of each such series, and
the qualifications, limitations or restrictions thereof, if
any, may differ from those of any and all other series at
any time outstanding.
2. Preferences and Rights. Subject to the
provisions of subparagraph 3 of this Paragraph B of Article
IV, the Board of Directors of the Corporation is hereby
expressly granted authority to fix by resolution or resolu
tions adopted prior to the issuance of any shares of each
particular series of Preferred Shares, the designation,
powers, preferences and voting, relative, participating,
optional and other rights, and the qualifications, limita
tions and restrictions thereof, if any, of such series,
including, but without limiting the generality of the
foregoing, the following:
(a) The distinctive designation of, and the
number of Preferred Shares that shall constitute, the
series, which number from time to time may be increased
(except as otherwise fixed by the Board of Directors)
or decreased (but not below the number of shares
thereof then outstanding) from time to time by action
of the Board of Directors;
(b) The rate and times at which, and the
terms and conditions upon which, dividends on the
shares of the series shall be paid, whether the divi
dends shall be cumulative or non-cumulative, and if
cumulative, from what date or dates, and the prefer
ences or relation, if any, of such dividends to the
dividends payable on any shares of any other series or
class of stock of the Corporation;
(c) Whether shares of the series shall be
subject to redemption, and if so subject, whether they
shall be subject to redemption (i) at the option of the
Corporation, the shareholder, another person and/or
upon the occurrence of a designated event, (ii) for
cash, indebtedness, securities (including, without
limitation, Common Shares) or other property, or any
combination thereof, and (iii) for a designated amount
or for an amount determined in accordance with a
designated formula or by reference to extrinsic data or
events; and, as to any shares of a series subject to
redemption, such other terms and conditions on which
the shares of the series may be redeemed;
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(d) Whether the holders of the shares of the
series shall be entitled to the benefit of a sinking
fund or redemption or purchase account to be applied to
the purchase or redemption of the shares of the series
and, if so entitled, the amount of such fund and the
terms and conditions relative to the operation thereof;
(e) Whether the shares of the series shall
be convertible into, or exchangeable for, any Common or
other Preferred Shares of the Corporation or any other
securities and, if so convertible or exchangeable,
whether the conversion or exchange (i) is at the option
of the Corporation, the shareholder, another person
and/or upon the occurrence of a designated event, (ii)
shall be for cash, indebtedness, securities (including,
without limitation, Common Shares) or other property,
or any combination thereof, and (iii) shall be for a
designated amount or at a designated ratio, or for an
amount or at a ratio determined in accordance with a
designated formula or by reference to extrinsic data or
events; and, as to any shares of a series so convert
ible or exchangeable, such other terms and conditions
on which the shares of the series may be converted or
exchanged;
(f) The rights, if any, of the holders of
the shares of the series upon voluntary or involuntary
liquidation, merger, consolidation, distribution or
sale of assets, dissolution or winding-up of the
Corporation;
(g) Whether the shares of the series shall
have priority over or parity with or be junior to the
shares of any other class or series, or shall be
entitled to the benefit of limitations restricting (i)
the creation of indebtedness of the Corporation, (ii)
the issuance of shares of any other class or series
having priority over or being on a parity with the
shares of such series, or (iii) the payment of divi
dends on, the making of other distributions with
respect to, or the purchase or redemption of shares of
any other class or series on parity with or ranking
junior to the shares of any such series as to dividends
or other distributions, and the terms of any such
restrictions; or any other restrictions with respect to
shares of any class or series on parity with or ranking
junior to the shares of such series in any respect;
(h) Whether and in what circumstances shares
of a series shall have voting rights, which voting
rights, if any, may be general, special, conditional or
limited (and, in the case of special, conditional or
limited voting rights, may confer upon holders of such
series in certain circumstances the exclusive right to
elect a majority of the members of the Board of Direc
tors); and, as to any shares of a series having voting
rights, the number of votes each holder shall be
entitled to cast per each share of the series and
whether holders of the series are entitled to vote
separately or together with the holders of one or more
other series of Preferred Shares on all or some matters
as a separate voting group; and
(i) Any other powers, preferences, privileg
es and relative, participating, optional, or other
special rights of such series, and the qualifications,
limitations or restrictions thereof, to the fullest
extent now and hereafter permitted by law.
3. Issuance of Preferred Shares. Subject to the
following provisions of this subparagraph 3, shares of any
series of Preferred Shares may be issued from time to time
as the Board of Directors shall determine, on such terms and
for such consideration as shall be fixed by the Board of
Directors. The relative powers, preferences and rights of
each series of Preferred Shares in relation to the powers,
preferences and rights of each other series of Preferred
Shares shall be as fixed from time to time by the Board of
Directors in the resolution or resolutions adopted pursuant
to authority granted in this Paragraph B of Article IV.
Except as otherwise declared by law, the consent by class or
series vote or otherwise of the holders of such of the
series of the Preferred Shares as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Shares,
whether the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior
to, or on a parity with, the powers, preferences and rights
of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in such
resolution or resolutions adopted with respect to any series
of Preferred Shares that the consent of the holders of a
majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all
other series of Preferred Shares.
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ARTICLE V
Board of Directors
A. Number. The business and affairs of the
Corporation shall be managed and conducted by or under the
direction of a Board of Directors. The number of directors
(exclusive of directors to be elected by the holders of one
or more series of Preferred Shares of the Corporation that
may be outstanding, voting separately as a series or class)
shall be fixed from time to time by the Board of Directors
of the Corporation by resolution adopted by a majority of
the entire Board of Directors, but in no event shall be less
than nine (9) nor more than fifteen (15).
B. Classes of Directors. The Board of Directors
shall be divided into three classes, Class I, Class II and
Class III, that shall be as nearly equal in number as
reasonably possible; provided, however, that the number of
directors in any one class may not exceed the number of
directors in any other class by more than one. The initial
allocation of directors among classes shall be established
by resolution adopted by the holders of a majority of the
outstanding shares of the Corporation entitled to vote in an
election of directors.
C. Terms of Office. Each initial director in Class I
shall serve for a term expiring at the 1994 annual meeting
of shareholders; each initial director in Class II shall
serve for a term expiring at the 1995 annual meeting of
shareholders; and each initial director in Class III shall
serve for a term expiring at the 1996 annual meeting of
shareholders. At each annual meeting of shareholders
following adoption of these Amended and Restated Articles of
Incorporation, the directors chosen to succeed those whose
terms have expired shall be identified as being of the same
class of directors they succeed and shall be elected to
serve for a term ending on the third annual meeting of
shareholders following the annual meeting of shareholders at
which they were elected. Each director shall serve until
his successor is duly elected and qualified, except in the
case of death, resignation or removal.
D. Removal. Subject to the rights, if any, of the
holders of any series of Preferred Shares then outstanding,
any director or the entire Board of Directors may be removed
from office at any time, but only for cause and by the
affirmative vote of the holders of at least 67% of all
shares of the Corporation outstanding and then entitled to
vote generally in an election of directors, voting together
as a single class. Notwithstanding the immediately
preceding sentence, if less than the entire Board of
Directors is to be removed, no one of the directors may be
removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an
election of the class of directors of which he is a part.
E. Vacancies. Subject to the rights, if any, of the
holders of any series of Preferred Shares then outstanding,
newly created directorships resulting from any increase in
the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation or
removal may be filled only by a majority vote of the
directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at
the annual meeting of shareholders at which the term of
office of the class to which they have been elected expires
or, in the case of newly created directorships, shall hold
office until such time as determined by the directors
electing such new director (in a manner consistent with
Paragraph B of this Article V). No decrease in the number
of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
F. Rights of Holders of Preferred Shares.
Notwithstanding the foregoing, whenever the holders of any
one or more series of Preferred Shares issued by the
Corporation pursuant to Article IV shall have the right,
voting separately as a class or by series, to elect
directors at an annual or special meeting of shareholders,
the election, term of office, removal, filling of vacancies
and other features of such directorships shall be governed
by the terms of the series of Preferred Shares applicable
thereto, and such directors so elected shall not be divided
into classes pursuant to this Article V unless expressly
provided by the terms of the applicable series.
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ARTICLE VI
Bylaws
The Board of Directors is authorized to adopt, amend or
repeal the Bylaws of the Corporation. Any Bylaws made by
the directors under the powers conferred by this Article VI
may be amended or repealed by the shareholders of the
Corporation. The Bylaws may contain, among other matters,
provisions requiring (i) advance notice of business to be
conducted and shareholder proposals to be submitted at an
annual meeting of shareholders of the Corporation, (ii)
procedures for the nomination of persons for election to the
Board of Directors, including nominations made other than by
or at the direction of the Board of Directors, and (iii)
provisions requiring that various provisions of the Bylaws
may not be amended or repealed unless the holders of a
supermajority percentage of the shares of the Corporation
then entitled to vote generally in an election of directors,
not to exceed 80%, voting together as a single class,
approve such amendment or repeal.
ARTICLE VII
Higher Vote for Certain Business Combinations Required
Except as otherwise provided in this Article VII, the
affirmative vote of the holders of no fewer than (i) 67% of
the outstanding Voting Shares (as hereinafter defined) of
the Corporation and (ii) a majority of the outstanding
Voting Shares of the Corporation that are not "beneficially
owned" (as hereinafter defined) by an Interested Shareholder
that directly, or indirectly through an Affiliate, is a
party to or otherwise proposes any of the following
transactions involving the Corporation or any of its
Subsidiaries, shall be required to approve any of the
following transactions ("Business Combination"):
(a) Any merger or consolidation of the
Corporation or any of its Subsidiaries (as hereinafter
defined) with or into an Interested Shareholder or an
Affiliate, or any merger or consolidation of an Interested
Shareholder or an Affiliate with or into the Corporation or
any of its Subsidiaries;
(b) Any share exchange involving the Corporation
or any of its Subsidiaries and the acquisition of shares of
the Corporation or any of its Subsidiaries by an Interested
Shareholder or an Affiliate pursuant to such share exchange;
(c) Any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of transactions) of all or substantially all of the
assets of the corporation or any of its Subsidiaries to an
Interested Shareholder or an Affiliate;
(d) Any issuance or transfer by the Corporation
or by any of its Subsidiaries (in one transaction or a
series of transactions) of any Voting Shares of the
Corporation or any of its Subsidiaries to any Interested
Shareholder or an Affiliate in exchange for cash, securities
or other property;
(e) Any adoption of any plan or proposal for
liquidation or dissolution of the Corporation or any of its
Subsidiaries proposed by or on behalf of an Interested
Shareholder;
(f) Any reclassification of securities,
recapitalization or other transaction (other than a
redemption in accordance with the terms of the security
redeemed) which has the effect, directly or indirectly, of
increasing the proportionate amount of Voting Shares of the
Corporation or any of its Subsidiaries that are beneficially
owned by an Interested Shareholder or an Affiliate, or any
partial or complete liquidation, spin-off, split-off or
split-up of the Corporation or any of its Subsidiaries; or
<PAGE>
(g) Any agreement, contract or other arrangement
providing for any of the transactions described above in
paragraphs (a) to (f) in this Article VII.
The voting requirement of this Article VII shall not be
applicable to any particular Business Combination if the
Business Combination has been approved by a majority of the
Disinterested Directors (as hereinafter defined). The
Business Combination that has been approved by a majority of
the Disinterested Directors shall require the affirmative
vote as is required by law.
For the purposes of these Articles of Incorporation:
(a) "Affiliate": An "Affiliate" of an Interested
Shareholder is a person or other entity that directly or
indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, an
Interested Shareholder.
(b) "Associate": An "Associate" of an Interested
Shareholder means (i) a director, officer, partner or
beneficial owner of ten percent or more of any class of its
securities or other similar interests, (ii) if the
Interested Shareholder is a trust or other estate, any
person that has a substantial beneficial interest in, or who
serves as a trustee of, the Interested Shareholder or serves
in a similar fiduciary capacity for it, (iii) any relative
or spouse of the Interested Shareholder or any relative or
spouse of any officer, director or beneficial owner of ten
percent or more of any class of securities or other similar
interests of an Interested Shareholder, and (iv) any
relative of such spouse referred to in clause (b)(iii),
immediately above, who resides in the same home as the
Interested Shareholder or any officer, director or
beneficial owner of ten percent or more of any class of
securities or other similar interests of the Interested
Shareholder.
(c) "Beneficial Ownership": A person or entity
"beneficially owns" securities or other similar interests in
another when such person, directly or indirectly, through
any contract, arrangement, understanding, relationship or
otherwise, has or shares (i) the voting power, which
includes the power to direct the voting of such security or
other similar interests, or (ii) the right to acquire the
securities or other similar interests pursuant to any
contract or arrangement upon the exercise of any option,
warrant or other similar right, upon the conversion of any
other shares or upon the revocation of a trust or otherwise.
A person or entity shall be conclusively deemed to
"beneficially own" securities or other similar interests of
its Affiliates or Associates.
(d) "Disinterested Director": A "Disinterested
Director" shall mean any member of the Board of Directors
who is unaffiliated with the Interested Shareholder and was
a member of the Board of Directors prior to the time that
the Interested Shareholder became an Interested Shareholder,
and any successor of a Disinterested Director who is not an
Affiliate of the Interested Shareholder and is recommended
to succeed a Disinterested Director by a majority of the
Disinterested Directors then on the Board of Directors.
(e) "Interested Shareholder": An "Interested
Shareholder" of the Corporation means any person who or
which:
(i) itself or together with its Affiliates
and Associates is the beneficial owner, directly or
indirectly, of ten percent or more of the outstanding
Voting Shares of the Corporation or any of its
Subsidiaries; or
(ii) is an assignee of or has otherwise
succeeded to, the beneficial ownership of any Voting
Shares of the Corporation or any of its Subsidiaries
that were at any time within a two-year period
immediately prior to the date in question beneficially
owned by an Interested Shareholder, if such assignment
or succession shall have occurred in the course of a
transaction or series of transactions not involving a
public offering within the meaning of the Securities
Act of 1933, as amended.
(f) "Subsidiary": A "Subsidiary" of the
Corporation is another corporation of which one-half or more
of its Voting Shares are beneficially owned by the
Corporation, directly or indirectly, through one or more
intermediaries.
<PAGE>
(g) "Voting Shares": "Voting Shares" shall mean
any security or other similar interest of any corporation,
trust, partnership or other entity that carries with it a
right to vote generally in the election of directors or
other governing body of that entity.
The Disinterested Directors shall have the power and
duty to determine for the purposes of this Article VII, on
the basis of the information known to them after reasonable
inquiry, (i) whether a person or entity is an Interested
Shareholder, (ii) the number of Voting Shares beneficially
owned by any person or entity, (iii) whether a person or
entity is an Affiliate or an Associate of another, (iv)
whether any transaction or series of transactions is a
Business Combination, (v) whether the assets sold in any
Business Combination constitute substantially all of the
assets of the Corporation or any of its Subsidiaries, and
(vi) such other matters with respect to which a
determination is required under this Article VII. Any such
determination made by a majority of the Disinterested
Directors shall be final and binding for all purposes
hereunder.
ARTICLE VIII
Shareholder Action
A. General. Subject to the rights, if any, of the
holders of any series of Preferred Shares then outstanding,
any action required or permitted to be taken at any annual
or special meeting of shareholders may be taken only upon
the vote of the shareholders at an annual or special meeting
duly called and may not be taken by written consent of the
shareholders.
B. Special Meetings. Subject to the rights, if any,
of the holders of any series of Preferred Shares then
outstanding, the Corporation shall only hold a special
meeting of shareholders:
(a) On call of a majority of the entire Board of
Directors; or
(b) If the holders of at least 67% of all the
votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting sign, date, and
deliver to the Corporation's secretary one (1) or more
written demands for the meeting describing the purpose or
purposes for which it is to be held.
<PAGE>
ARTICLE IX
Indemnification and Insurance
A. Right to Indemnification. Each person who was or
is made a party or is threatened to be made a party to, or
is involved in, any action, suit or proceeding, whether
civil, criminal, administrative or investigative and whether
formal or informal (hereinafter a "proceeding"), by reason
of the fact that he or she, or a person of whom he or she is
the legal representative, is or was a director or officer of
the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding
is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while
serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the
fullest extent authorized by the KBCA, as the same exists or
may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to
such amendment), against all expense, liability and loss
(including attorney's fees, judgements, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settle
ment) reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall contin
ue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however,
that, except as provided in paragraph B hereof, the Corpora
tion shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated
by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this paragraph A
of Article IX shall be a contract right and shall include
the right to be paid by the Corporation the expenses in
curred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the KBCA
requires, the payment of such expenses incurred by a direc
tor or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was
or is rendered by such person while a director or officer,
including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corpo
ration of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is
not entitled to be indemnified under this section or other
wise. The Corporation may, by action of its Board of
Directors, provide indemnification to employees and agents
of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
B. Right of Claimant to Bring Suit. If a claim under
paragraph A of this Article IX is not paid in full by the
Corporation within 30 days after a written claim has been
received by the Corporation, the claimant may, at any time
thereafter, bring suit against the Corporation to recover
the unpaid amount of the claim and, if successful in whole
or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered
to the Corporation) that the claimant has not met the
standard of conduct that makes it permissible under the KBCA
for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on
the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel
or its shareholders) to have made a determination prior to
the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the
KBCA, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel
or its shareholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met
the applicable standard of conduct.
C. Non-Exclusivity of Rights. The right to indemni
fication and the payment of expenses incurred in defending a
proceeding in advance of its final disposition conferred in
this Article IX shall not be exclusive of any other right
that any person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, Bylaw,
agreement, vote of shareholders or disinterested directors,
or otherwise.
<PAGE>
D. Insurance. The Corporation may maintain insur
ance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss,
whether or not the Corporation would have the power to
indemnify such person against such expense, liability or
loss under the KBCA.
ARTICLE X
Limitation on Director Liability
A. Scope of Limitation. A director of the Corpora
tion shall not be personally liable to the Corporation or
its shareholders for monetary damages for any act or omis
sion constituting a breach of his duty as a director, unless
such act or omission (i) relates to a transaction in which
the director has a personal financial interest that is in
conflict with the financial interests of the Corporation or
its shareholders; (ii) is not in good faith or involves
intentional misconduct or is known to the director to be a
violation of law; (iii) is a vote for or assent to an
unlawful distribution to shareholders as prohibited under
KRS 271B.8-330; or (iv) relates to a transaction from which
the director derives an improper personal benefit.
B. Amendment of KBCA. If the KBCA is amended to
authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited
to the fullest extent permitted by the KBCA, as so amended,
without the necessity for further shareholder action in
respect thereof.
C. Repeal or Modification. Any repeal or modifica
tion of this Article X by the shareholders of the Corpora
tion shall not adversely affect any right or protection of a
director of the Corporation hereunder in respect of any act
or omission occurring prior to the time of such repeal or
modification.
ARTICLE XI
Share Distributions
Except as may be provided by the Board of Directors of
the Corporation in a designation of any series of Preferred
Shares (in accordance with the provisions of Paragraph B of
Article IV), shares of one class or series may be issued as
a share dividend in respect of shares of another class or
series.
ARTICLE XII
Change in Control Proposals
In furtherance and not in limitation of the powers
conferred by law or in these Amended and Restated Articles
of Incorporation, the Board of Directors (and any committee
of the Board of Directors) is expressly authorized, to the
extent permitted by law, to take such action or actions as
the Board or such committee may determine to be reasonably
necessary or desirable to (i) encourage any person to enter
into negotiations with the Board of Directors and management
of the Corporation with respect to any transaction that may
result in a change in control of the Corporation that is
proposed or initiated by such person or (ii) contest or
oppose any such transaction that the Board of Directors or
such committee determines to be unfair, abusive or otherwise
undesirable with respect to the Corporation and its
business, assets or properties or the shareholders of the
Corporation, including, without limitation, the adoption of
such plans or the issuance of rights, options, shares,
notes, debentures or other evidences of indebtedness or
other securities of the Corporation, which rights, options,
shares, notes, debentures or evidences of indebtedness or
other securities (x) may be exchangeable for or convertible
into cash or other securities on such terms and conditions
as may be determined by the Board or such committee and (y)
may provide for the treatment of any holder or class of
holders thereof designated by the Board of Directors or any
such committee in respect of the terms, conditions,
provisions and rights of such securities that is different
from, and unequal to, the terms, conditions, provisions and
rights applicable to all other holders thereof.
<PAGE>
ARTICLE XIII
Super Majority Approval for Certain Amendments to
These Amended and Restated Articles of Incorporation
Notwithstanding any other provision in these Amended
and Restated Articles of Incorporation to the contrary, the
provisions of Articles V, VI, VII, VIII, IX, X and XII, and
this Article XIII, shall not be amended or repealed, nor
shall any provision in these Amended and Restated Articles
of Incorporation that is inconsistent with Articles V, VI,
VII, VIII, IX, X and XII, and this Article XIII, be adopted,
unless approved by the affirmative vote of the holders of no
fewer than (i) 67% of the voting power of all shares of the
Corporation then entitled to vote generally in the election
of directors, voting together as a single class, and (ii) a
majority of the voting power of all shares of the
Corporation entitled to vote generally in the election of
directors, voting together as a single class, excluding the
voting power of all shares of the Corporation of a then
Interested Shareholder not beneficially owned by such
shareholder (whether then an "Interested Shareholder" or
otherwise) on March 9, 1993.
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
BOURBON BANCSHARES, INC.
Pursuant to the provisions of KRS 271B.10-030 and KRS
271B.10-060, Articles of Amendment to the Articles of
Incorporation of Bourbon Bancshares, Inc. (the
"Corporation") are hereby adopted:
FIRST: The name of the Corporation is Bourbon
Bancshares, Inc.
SECOND: The amendment adopted amends
the first leterary sentence of
Article IV of the Articles of
Incorporation to read in its
entirety as follows:
"The total number of shares
that the Corporation shall
have the authority to issue is
3,300,000 shares, which shall
be divided into two classes as
follows: 3,000,000 Common
Shares; and 300,000 Preferred
Shares."
THIRD: The above-described amendment
was adopted on May 2, 1994 at
a meeting of the shareholders
of the Corporation held upon
written notice as provided in
the Kentucky Business
Corporation Act.
FOURTH: Of the 585,590 Common Shares
of the Corporation outstanding
and entitled to vote on the
above-described amendment,
454,825 Common Shares were
indisputably represented at
the meeting, and 454,825 were
cast in favor there-of and
none were cast against. The
number of votes cast for
approval of the above-
described amendment was
sufficient for approval
thereof.
Dated: May 27, 1994
BOURBON BANCSHARES, INC.
By:__/s/Buckner Woodford______
Buckner Woodford, President
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
BOURBON BANCSHARES, INC.
Pursuant to the provisions of KRS 271B.10-030 and KRS
271B.10-060, Articles of Amendment to the Articles of
Incorporation of Bourbon Bancshares, Inc. (the
"Corporation") are hereby adopted:
FIRST: The name of the Corporation is Bourbon
Bancshares, Inc.
SECOND: The amendment (the "Share
Amendment") adopted amends the
first sentence of Article IV
of the Articles of
Incorporation to read in its
entirety as follows:
"The total number of shares
that the Corporation shall
have the authority to issue is
10,300,000 shares, which shall
be divided into two classes as
follows: 10,000,000 Common
Shares; and 300,000 Preferred
Shares."
THIRD: The amendment (the "Director
Amendment") adopted amends
Section A. of Article V of the
Articles of Incorporation to
read in its entirety as
follows:
"A. Number. The business
and affairs of the Corporation
shall be managed and conducted
by or under the direction of a
Board of Directors. The
number of directors (exclusive
of directors to be elected by
the holders of one or more
series of Preferred Shares of
the Corporation that may be
outstanding, voting separately
as a series or class) shall be
fixed from time to time by the
Board of Directors of the
Corporation by resolution
adopted by a majority of the
entire Board of Directors, but
in no event shall be less than
five (5) nor more than fifteen
(15)."
FOURTH: The Share Amendment and the
Director Amendment were
adopted by holders of the
Corporation's Common Shares,
the Corporation's sole class
of issued and outstanding
shares, at the Corporation's
1999 Annual Meeting of
Shareholders (the "1999 Annual
Meeting") on May 3, 1999.
<PAGE>
FIFTH: There were 1,402,588 Common
Shares issued, outstanding and
entitled to vote at the 1999
Annual Meeting, of which
1,156,945 Common Shares were
indisputably represented at
the 1999 Annual Meeting. The
total number of undisputed
votes cast for the Share
Amendment was 1,116,814 and
the total number of undisputed
votes cast for the Director
Amendment was 1,112,535. The
number of undisputed votes
cast for each of the Share
Amendment and the Director
Amendment was sufficient for
approval by the shareholders.
Dated: June 10, 1999.
BOURBON BANCSHARES, INC.
By:_/s/Buckner Woodford_______
Buckner Woodford, President
Exhibit 11
Earnings Per Share
The factors used in the earnings per share computation follow:
Three Months Ended
March 31,
2000 1999
(in thousands)
Basic Earnings Per Share
Net Income $1,308 $1,119
Weighted average common shares outstanding 2,809 2,805
Basic earnings per share $ 0.47 $ 0.40
Diluted Earnings Per Share
Net Income $1,308 $1,119
Weighted average common shares outstanding 2,809 2,805
Add dilutive effects of assumed exercise
of stock options 63 57
Weighted average common and dilutive
Potential common shares outstanding 2,872 2,862
Diluted earnings per share $ 0.46 $ 0.39
Stock options for 600 shares (for the quarter ended March
31, 2000) and 25,780 shares (for the quarter ended March
31, 1999) of common stock were not considered in
computing earnings per share because they were
antidilutive.
<PAGE>
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