FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-9785
TRI CITY BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1158740
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
6400 S. 27th Street, Oak Creek, WI 53154
(Address of principal executive offices)
(414) 761-1610
(Registrant's phone number, including area code)
Indicate by check mark whether the registrant (1) has filed all documents and
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
The number of shares outstanding of $1.00 par value common stock, as of
March 31, 1995: 2,460,894
<PAGE>
FORM 10-Q
TRI CITY BANKSHARES CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Page #
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 1995 and December 31, 1994 3
Consolidated Statements of Income
for the Three Months ended March 31,
1995 and 1994 4
Consolidated Statements of Cash Flows
for the Three Months ended March 31,
1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Items 1 - 6 12
Signatures 13
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<PAGE>
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS March 31, December 31,
1995 1994
------------ ------------
Cash and due from banks $ 21,498,074 $ 28,042,066
Federal funds sold 4,750,000 0
Investment securities (market
value: 1995 - $90,213,302;
1994 - $87,698,918) 92,851,134 93,277,595
Loans 223,099,529 213,287,740
Allowance for loan losses (3,471,252) (3,395,101)
NET LOANS 219,628,277 209,892,639
Premises and equipment 19,823,965 19,857,706
Other assets 5,899,746 6,259,987
------------ ------------
$ 364,451,196 $ 357,329,993
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 82,783,020 $ 83,072,574
Interest bearing
(over $100,000) 10,773,000 9,691,000
Interest bearing 227,415,610 207,312,921
TOTAL DEPOSITS 320,971,630 300,076,495
Short-term borrowings:
Federal funds purchased and
securities sold under agree-
ments to repurchase 0 13,900,000
Other 626,690 2,406,970
----------- -----------
TOTAL BORROWINGS 626,690 16,306,970
Other Liabilities 1,809,810 1,153,632
----------- -----------
TOTAL LIABILITIES 323,408,130 317,537,097
Stockholders' equity:
Cumulative preferred stock, par
value - $1 per share
Authorized - 200,000 shares
Issued and outstanding - none
Common stock, par value - $1 per
share
Authorized - 5,000,000 shares
Issued and outstanding: 1995-
2,460,894 shares; 1994-
2,457,489 2,460,894 2,457,489
Additional paid in capital 8,162,371 8,091,712
Retained earnings 30,419,801 29,243,695
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 41,043,066 39,792,896
$ 364,451,196 $ 357,329,993
=========== ===========
See Notes to Unaudited Consolidated Financial Statements.
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<PAGE>
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
1995 1994
---------- ----------
Interest income:
Loans, including fees $ 5,104,048 $ 4,450,126
Investment securities:
Taxable 1,048,960 1,086,820
Exempt from federal income tax 381,548 441,366
Federal funds sold 43,378 21,470
--------- ---------
TOTAL INTEREST INCOME 6,577,934 5,999,782
Interest expense:
Deposits 1,952,565 1,538,149
Short-term borrowings 114,752 128,252
--------- ---------
TOTAL INTEREST EXPENSE 2,067,317 1,666,401
--------- ---------
NET INTEREST INCOME 4,510,617 4,333,381
Provision for loan losses (75,000) (150,000)
--------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,435,617 4,183,381
Other income:
Service charge income 739,231 648,937
Rental income 209,130 205,551
Investment securities gains 0 2,000
Other 781,614 372,227
--------- ---------
TOTAL OTHER INCOME 1,729,975 1,228,715
Other expense:
Salaries and employee benefits 2,106,812 1,979,413
Net occupancy 602,397 632,840
Equipment 306,619 291,999
Data processing 122,847 155,246
Advertising 93,897 85,023
Regulatory Agency Assessments 186,701 181,037
Office Supplies 97,343 94,097
Other 566,341 527,496
--------- ---------
TOTAL OTHER EXPENSE 4,082,957 3,947,151
--------- ---------
Income before income taxes 2,082,635 1,464,945
Provision for income taxes 641,641 363,700
--------- ---------
NET INCOME $ 1,440,994 $ 1,101,245
========= =========
Per share data:
Net income $ 0.59 $ 0.47
--------- ---------
Average shares outstanding 2,460,289 2,367,629
--------- ---------
See Notes to Unaudited Consolidated Financial Statements.
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<PAGE>
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
1995 1994
OPERATING ACTIVITIES
Net income $ 1,440,994 $ 1,101,245
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 75,000 150,000
Provision for depreciation 383,925 393,742
(Increase) in interest receivable (367,596) (271,514)
Increase in interest payable 623,485 436,260
--------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,155,808 1,809,733
INVESTING ACTIVITIES
Proceeds from maturities
and redemptions of
investment securities 428,323 1,619,705
Purchases of investment
securities (1,862) (527,322)
Net (increase) decrease in loans (9,810,638) 6,717,307
Purchases of premises and
equipment (310,859) (190,370)
Net (increase) decrease in other
assets 727,837 (250,332)
--------- ---------
NET CASH (USED) PROVIDED
BY INVESTING ACTIVITIES (8,967,199) 7,368,988
FINANCING ACTIVITIES
Net increase in deposits 20,895,135 902,366
Net decrease in short-term
borrowings (15,680,280) (12,182,711)
Cash dividends (233,090) (110,436)
Net increase in other liabilities 35,634 225,927
---------- ----------
NET CASH (USED) PROVIDED BY
FINANCING ACTIVITIES 5,017,399 (11,164,854)
--------- ----------
DECREASE IN CASH AND
CASH EQUIVALENTS (1,793,992) (1,986,133)
Cash and cash equivalents at the
beginning of the period 28,042,066 22,189,794
---------- ----------
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD $ 26,248,074 $ 20,203,661
============ ============
See Notes to Unaudited Consolidated Financial Statements.
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<PAGE>
TRI CITY BANKSHARES CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(A) Basis of Presentation
The unaudited consolidated financial statements included herein omit certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting
prinipals. Such condensation is permitted by generally accepted accounting
pricipals applicable to interim financial data and by rules and regulations of
the Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and the notes thereto included
in the latest Annual Report on Form 10-K of Tri City Bankshares Corporation
("Tri City") for the year ended December 31, 1994. The December 31, 1994
financial information included herein is derived from the December 31, 1994
Consolidated Balance Sheet of Tri City which is included in the aforesaid Annual
Report on Form 10-k.
In the opinion of Tri City's management, the accompanying unaudited consolidated
financial statements contain all adjustments consisting of normal recurring
accruals considered necessary to present fairly Tri City's financial position as
of March 31, 1995 and December 31, 1994 and the results of its operations and
cash flows for the three month period ending March 31, 1995 and 1994.
(B) Accounting Changes
Effective January 1, 1995, the Company adopted Financial Accounting Standards
Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan." As
a result of applying the new rules, certain impaired loans are reported at the
present value of expected future cash flows using the loan's effective interest
rate, or as a practical expedient, at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent. The adoption
of Statement 114 has not had, and is not expected to have, a material impact on
the Company's financial position or results of operations.
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<PAGE>
TRI CITY BANKSHARES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CHANGES IN FINANCIAL POSITION
Net assets for Tri City Bankshares Corporation (the "Corporation") have
increased $7.1 million (2.0%) during the first quarter of 1995 compared to a
decrease of $9.6 million (2.8%) during the same period in 1994. Loan and
deposit growth account entirely for this increase. Loan demand which was not
very strong during the last half of 1994, has increased during the first three
months of 1995. Loan balances increased $9.8 million (4.6%) in the first three
months of 1995 compared to a decrease of $6.7 million (3.3%) in the first three
months of 1994. The stability of interest rates and the slow down of inflation
appear to have enticed loan customers into pursuing their monetary endeavors.
Federal funds sold increased $4.8 million during the first quarter of 1995
compared to an increase of $3.1 million during the first quarter of 1994.
Management does not intend to actively engage in the purchase and sale of
securities and therefore tries to purchase those investments which will best
benefit the Corporation over the term of the security. Since management wants
to maintain a certain level of liquidity as well as have funds available for
loans and suitable investments, the Corporation will generally invest excess
funds in the Federal funds market which is basically an "on call" investment.
Investment securities decreased $426,000 (0.5%) during the first three months of
1995 compared to a decrease of $1.1 million (1.1%) during the first three months
of 1994. The decrease is due entirely to the normal maturity of the investments
in the Corporation's portfolio. Management has been cautious about purchasing
investment securities with low yields. Since interest rates have risen and
there remains the possibility that rates may increase, management is interested
in those securities which will provide the best yield without compromising the
integrity of the investment portfolio.
Deposits of the Corporation increased $20.9 million (6.96%) during the first
quarter of 1995 compared to an increase of $902,400 (0.3%) during the first
quarter of 1994. Management has run a special promotion during the first
quarter of 1995 which has helped to attract new deposit money to the
Corporation. With additional funds to use, the Corporation was able to get out
of a borrowed position in the Federal funds market and into a sold position.
Accordingly, total borrowings for the first three months of 1995 declined $15.7
million (96.2%) compared to a decline of $12.2 million (68.0%) during the same
period in 1994.
The liquidity of the Corporation has remained strong through the efforts of
management in monitoring the correlation between interest earning assets and
interest bearing liabilities. The fluctuation in interest rates has continued
to be a concern for the banking industry and is closely watched. Management has
been careful not to overextend the Corporation in its borrowing and to maintain
a more than adequate reserve to provide for the everyday monetary transactions
which may occur.
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<PAGE>
CAPITAL RESOURCES
During the first quarter of 1995 the Corporation opened a new full service
banking facility at a new Pick 'N Save food store located in Oak Creek,
Wisconsin. Funding for this facility was generated internally and was
considered nominal.
The Corporation has plans for the opening of at least two more full service
banking facilities to be located inside Pick 'N Save food stores during 1995.
The cost of these facilities is considered to be nominal, based on past
experience, and will be bourne by the Corporation.
There are no other major capital expenditures which are planned for the current
year. However, management is continually looking for opportunities which would
help in the continued growth of the Corporation and would pursue such
opportunities if presented to them.
RESULTS OF OPERATIONS
Net income during the first quarter of 1995 increased $339,800 (30.8%) compared
to an increase of $11,900 (1.1%) during the first quarter of 1994. Since loan
demand increased during 1995, interest income and fees on loans increased
$653,900 (14.7%) in the first three months of 1995 compared to a decrease of
$304,900 (6.4%) in the first three months of 1994.
Interest income on investment securities, both taxable and exempt from federal
tax, decreased $97,700 (6.4%) during the first quarter of 1995 compared to an
increase of $288,200 (23.2%) during the same period in 1994. As investment
securities mature, they are automatically being replaced. Management intends to
continue to seek securities which will provide a good yield without compromising
the integrity of the current portfolio.
Interest expense on deposits increased $414,400 (26.9%) in the first three
months of 1995 compared to a decrease of $129,300 (7.8%) in the first three
months of 1994. During 1994 interest rates on deposit accounts remained low and
did not begin to rise until later in the year. While rates are currently at the
highest they have been in the past two years, and if rates continue to rise at a
similar pace, management believes that they should be able to adjust interest
earnings and maintain the Corporation's profitable growth.
During the first quarter of 1995, the Corporation was able to sell some of its
other real estate holdings at a substantial profit. This gain accounts for
approximately $400,000 in other income on the income statement. Other expenses
increased only $135,800 (3.4%) during the first three months of 1995 compared to
$315,300 (8.7%)increase during the first three months of 1994.
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<PAGE>
A summarized change in income for the quarters appears below:
March 31, March 31, 1995
1995 1994 Over(Under)
Three Months Ended (Unaudited) (Unaudited) 1994
----------- ----------- -----------
Revenue and Expenses:(000's)
Interest Income $6,578 $6,000 $ 578
Less: Interest Expense 2,067 1,666 401
------ ------ ------
Net Interest Income 4,511 4,334 177
Less: Provision for Loan Loss 75 150 ( 75)
Other Operating Expense
Net of Other Operating
Revenues 2,353 2,719 (366)
------ ------ ------
Income Before Income Taxes 2,083 1,465 618
Tax Provision 642 364 278
------ ------ ------
NET INCOME $1,441 $1,101 $ 340
====== ====== ======
CAPITAL ADEQUACY
Federal banking regulatory agencies have established capital adequacy rules
which take into account risk attributable to balance sheet assets and off-
balance-sheet activities. All banks and bank holding companies must meet a
minimum risk-based capital ratio of 8.0% of which 4.0% must be comprised of
tier 1 capital. The federal banking agencies also have adopted leverage capital
guidelines which banking organizations must meet. Under these guidelines, the
most highly rated banking organizations must meet a minimum leverage ratio of at
least 3.0% tier 1 capital to total assets, while lower rated banking
organizations must maintain a ratio of at least 4.0% to 5.0%.
The risk-based capital ratio as of March 31, 1995 for the Corporation is 16.7%
and its leverage ratio is 11.3%.
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<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
None
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
Exhibits - None
Tri City did not file any reports on form 8-K during the three month
period ended March 31, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRI CITY BANKSHARES CORPORATION
DATE: May 10, 1995 /s/Henry Karbiner
-------------------------
Henry Karbiner, Jr.
Executive Vice President,
Secretary/Treasurer
DATE: May 10, 1995 /s/Thomas W. Vierthaler
-------------------------
Thomas W. Vierthaler
Vice President and Comptroller
(Chief Accounting Officer)
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<NAME> TRI CITY BANKSHARES CORP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
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