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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number 0-10196
INDEPENDENT BANKSHARES, INC.
EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
INDEPENDENT BANKSHARES, INC.
547 Chestnut Street
Abilene, Texas 79602
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<PAGE>
INDEPENDENT BANKSHARES, INC.,
EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
December 31, 1996 and 1995
<PAGE>
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
CONTENTS
December 31, 1996 and 1995
Page
FINANCIAL STATEMENTS:
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits 4
Statements of Changes in Net Assets Available
for Plan Benefits 5
Notes to Financial Statements 6
SUPPLEMENTARY INFORMATION:
Independent Auditors' Report on Supplementary
Information 10
Schedule of Assets Held for Investment Purposes 11
Schedule of Reportable Transactions 12
Signature 13
Index to Exhibits 14
2
<PAGE>
[Letterhead]
March 25, 1997
To the Employee Stock Ownership/401(k)
Plan Committee of Independent Bankshares, Inc.
Abilene, Texas
Independent Auditors' Report
We have audited the accompanying statements of net assets
available for plan benefits of the Independent Bankshares, Inc.
Employee Stock Ownership/401(k) Plan as of December 31, 1996 and
1995, and the related statements of changes in net assets available
for plan benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets available
for plan benefits of the Independent Bankshares, Inc. Employee
Stock Ownership/401(k) Plan as of December 31, 1996 and 1995, and
the changes in net assets available for plan benefits for the years
then ended in conformity with generally accepted accounting
principles.
/s/ Condley and Company, L.L.P.
Certified Public Accountants
3
<PAGE>
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 85,434 $ 96,344
CONTRIBUTIONS RECEIVABLE 0 2,919
INVESTMENTS AT FAIR VALUE (NOTE 5) 1,861,924 1,220,693
NOTES RECEIVABLE (NOTE 6) 24,773 3,595
ACCRUED INCOME 60 3,508
---------- ----------
TOTAL ASSETS 1,972,191 1,327,059
LIABILITIES 4,859 4,425
---------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $1,967,332 $1,322,634
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
4
<PAGE>
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995
---- ----
<S> <C> <C>
ADDITIONS:
Investment Income:
Net unrealized appreciation
in fair value of investments $ 588,185 $ 511,937
Dividend income 21,591 18,311
Interest income 6,343 5,314
Miscellaneous income 8 122
Gain on sale of investments 1,949 414
---------- ----------
Total Investment Income 618,076 536,098
Employer contributions 76,751 69,690
Employee contributions 49,612 63,316
---------- ----------
Total Additions 744,439 669,104
---------- ----------
DEDUCTIONS:
Distributions to participants 80,161 47,946
Administrative expenses 19,580 17,212
---------- ----------
Total Deductions 99,741 65,158
---------- ----------
NET INCREASE 644,698 603,946
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of Year 1,322,634 718,688
---------- ----------
End of Year $1,967,332 $1,322,634
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
5
<PAGE>
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE 1: DESCRIPTION OF PLAN
Independent Bankshares, Inc. (the "Company") established the
Independent Bankshares, Inc. Employee Stock Ownership Plan (the
"Plan") effective January 1, 1987. The Plan is an employee stock
ownership plan ("ESOP"), and is designed to comply with Section
4975(e)(7) and the regulations thereunder of the Internal Revenue
Code of 1986, as amended (the "Code"), and is subject to the
applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Plan is administered by
Independent Bankshares, Inc. Employers participating in the Plan
during the year are Independent Bankshares, Inc. and its wholly
owned subsidiaries First State Bank, N.A., Abilene, Texas and First
State Bank, N.A., Odessa, Texas. On December 30, 1996, First State
Bank, N.A., Odessa was merged with and into First State Bank, N.A.,
Abilene. First State Bank, N.A., Abilene is now the Plan's trustee.
The Plan was amended in 1993 to add 401(k) provision. This
allows plan participants to make salary deferrals which are
credited to each participant's account. The Plan name was changed
to the Independent Bankshares, Inc. Employee Stock Ownership/401(k)
Plan.
The more significant aspects of the Plan are summarized below:
Eligibility to Participate
An employee becomes a participant on the January 1 or July 1
coincident with or immediately following the later of the date on
which he or she completes one year of service (1,000 hours), and
attains age 21.
Employer's Contributions
The Company, at its discretion, annually will determine the
amount of its contribution, if any, to the Plan. The Company may
make its contribution to the Plan in cash or in the Company's
common stock or such property that is acceptable to the trustee.
For each plan year the Company and its subsidiaries contribute to
the Plan, the allocation of the contribution will be based upon a
participant's proportionate share of the total compensation paid
during that plan year to all participants in the Plan. The Company
may also, at its discretion, make a matching contribution of up to
5% of eligible participants' yearly compensation.
Employee Contributions
The Plan permits (but does not require) employees to make
voluntary contributions or salary deferrals up to the maximum
amount allowable by law.
Vesting
An employee's interest in the contributions by the Company and
its subsidiaries to the Plan for the employee's benefit becomes
100% vested (nonforfeitable) upon the employee attaining age 65, or
if the employee terminates employment because of death or
disability. If an employee terminates employment prior to normal
retirement age for any reason other than death or disability, then
the employee's interest in the contributions by the Company and its
subsidiaries to the Plan for the employee's benefit becomes vested
in accordance with the following schedule:
6
<PAGE>
<TABLE>
<CAPTION>
Years of Service Nonforfeitable
With the Employer Accrued Benefit
----------------- ---------------
<S> <C>
Less than 2 None
2 10%
3 20%
4 40%
5 60%
6 80%
7 100%
</TABLE>
Forfeitures
The Plan provides two methods of vesting forfeiture. The
primary method of vesting forfeiture is the "forfeiture break in
service" rule. The secondary method of forfeiture is the "cash
out" rule. Termination of employment alone will not result in a
forfeiture under the Plan unless an employee does not return to
employment with the Company before incurring a "forfeiture break in
service" (a period of 5 consecutive plan years). The cash out rule
becomes operative if an employee terminates employment and receives
a total distribution of the vested portion of his or her account
balance.
Distributions
Distributions after an employee attains age 65 will be paid as
soon thereafter as practical.
If an employee dies prior to receiving all of his or her
benefits under the Plan, the trustee will pay the balance of their
account to their beneficiary.
If an employee becomes disabled, the trustee will pay his or
her account balance as if he or she had retired.
If an employee terminates employment prior to attaining normal
retirement age, the trustee will distribute the employee's vested
interest in lump sum or in equal installments over a fixed period
of time. The Employee Stock Ownership/401(k) Plan Committee will
direct the trustee to distribute the employee's vested interest in
the Plan at any time prior to the close of the plan year in which
the employee separates from service, postpone distribution until
after the plan year in which the employee separates from service,
or postpone distribution until the employee attains age 65.
Plan Termination
The Company reserves the right to terminate the Plan at any
time, subject to Plan provisions. Upon such termination of the
Plan, the interest of each participant will be distributed to such
participant or his or her beneficiary at the time prescribed by the
Plan terms and the Code.
7
<PAGE>
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Valuation and Income Recognition
The common shares of the Company are valued at fair value on
December 31 of each year. Fair values at December 31, 1996 and 1995,
was determined by using the closing sales prices for the last market
transaction on or prior to those dates according to the American
Stock Exchange.
Each preferred share of the Company was convertible into 18.375
common shares. The preferred shares were valued using the fair
value of the common shares on December 31, 1995. The Company
converted 2,918 of the preferred shares into 53,618 of the
common shares during the year ended December 31, 1996.
Mutual funds owned by the Company are valued on December 31 of
each year. Fair value is determined by the fair value on December
31 as published in the Wall Street Journal.
Dividend income is accrued on the ex-dividend date.
Purchases and sales of securities are recorded on a trade-date
basis. Realized gains and losses from security transactions are
reported on the specific identification method.
Contributions
Contributions are recognized in the year in which they are
declared and not received.
NOTE 3. TAX STATUS
The Internal Revenue Service has determined and informed the
Company by a letter dated June 28, 1995, that the Plan is qualified
and tax-exempt under the appropriate sections of the Code.
NOTE 4. ADMINISTRATION OF PLAN ASSETS
The Plan's assets, which consist principally of the Company's
Common Stock and mutual funds, are held by the trustee of the Plan.
Contributions are held and managed by the trustee under the
direction of the Employee Stock Ownership/401(k) Plan Committee.
The trustee invests contributions received, interest, and dividend
income and makes distributions to participants.
Certain administrative functions are performed by officers or
employees of the Company or its subsidiaries. No such officer or
employee receives compensation from the Plan.
NOTE 5. INVESTMENTS
The Plan's investments, at December 31, are presented in the
following table:
8
<PAGE>
<TABLE>
<CAPTION>
1996
--------------------------------------
Number of
Shares Held Cost Fair Value
------------ -------- ----------
<S> <C> <C> <C>
Independent Bankshares, Inc.
Common Stock 112,672 $371,417 $1,789,231
Federated Managed Income Fund 891.7925 9,139 9,275
Federated Managed Growth &
Income Fund 2,535.7119 26,970 28,070
Federated Managed Growth Fund 1,701.965 18,470 20,066
Federated Managed Aggressive
Growth Fund 1,263.966 13,959 15,282
-------- ----------
$439,955 $1,861,924
======== ==========
</TABLE>
1995
-----------------------------------
Number of
Shares Held Cost Fair Value
----------- ---- ----------
[S] [C] [C] [C]
Independent Bankshares, Inc.
Common Stock 55,338 $222,814 $ 594,884
Independent Bankshares, Inc.
Series C Preferred Stock 2,918 122,556 576,395
Federated Managed Income Fund 560.58 5,657 5,886
Federated Managed Growth &
Income Fund 1,824.88 18,887 20,092
Federated Managed Growth Fund 1,223.85 12,730 13,854
Federated Managed Aggressive
Growth Fund 842.02 8,784 9,582
-------- ----------
$391,428 $1,220,693
======== ==========
NOTE 6. NOTES RECEIVABLE
Notes receivable from participants as of December 31, consist
of the following:
1996 1995
---- ----
[S] [C] [C]
Randal Crosswhite, originated March 29,
1995, at $2,600 with quarterly payments
of $163 and interest accruing at 9% $ 1,938 $2,111
Joel Valesquez, originated April 18, 1996,
at $1,195 with monthly payments of $54 and
interest accruing at 8.25% 812 0
Karen Timmons, originated September 19,
1996, at $850 with monthly payments of $39
and interest accruing at 8.5% 745 0
Carolyn Marshall, originated November 5,
1996, at $3,850 with monthly payments of
$100 and interest accruing at 8.75% 3,778 0
Albert Jordan, originated December 13,
1996, at $9,000 with monthly payments of
$408 and interest accruing at 9% 9,000 0
Randal Crosswhite, originated December 23,
1996, at $8,500 with monthly payments of
$173 and interest accruing at 8.25% 8,500 0
Various loans originating in 1995 0 1,484
------- ------
$24,773 $3,595
======= ======
9
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
March 25, 1997
To the Employee Stock Ownership/401(k)
Plan Committee of
Independent Bankshares, Inc.
Abilene, Texas
Independent Auditors' Report on Supplementary Information
Our audit was conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedules of assets held for investment and reportable transactions
are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion,
are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Condley and Company, L.L.P.
Certified Public Accountants
10
<PAGE>
<TABLE>
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
EIN 75-1717279
Plan No. 003
Plan Year Ended December 31, 1996
Item 30a - Schedule of Assets Held for Investment Purposes
<CAPTION>
a b c d
Description of Investment,
Including Maturity Date, Rate
Identify of Issuer, Borrower of Interest, Collateral, Par or Current
Lessor, or Similar Party Maturity Value Cost Value
- ---------------------------- ------------------------------- ---- -------
<S> <C> <C> <C>
Independent Bankshares, Inc. 112,672 shares of $0.25 par value
Common Stock $371,417 $1,789,231
Federated Managed Income Fund 891.7925 fund units 9,139 9,275
Federated Managed Growth &
Income Fund 2,535.7119 fund units 26,970 28,070
Federated Managed Growth Fund 1,701.965 fund units 18,470 20,066
Federated Managed Aggressive
Growth Fund 1,263.966 fund units 13,959 15,282
</TABLE>
11
<PAGE>
<TABLE>
INDEPENDENT BANKSHARES, INC. EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
EIN 75-1717279
Plan No. 003
Plan Year Ended December 31, 1996
Item 30d - Schedule of Reportable Transactions
<CAPTION>
a b c d e f g h i
Description of Current
Assets (Include Expense Value of
Identity of Interest Rate Incurred Asset on
Party and Maturity in Purchase Selling Lease With Cost of Transaction Net Gain
Involved case of a Loan) Price Price Rental Transaction Asset Date or (Loss)
=========== =============== ======== ======= ====== =========== ======= =========== =========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Independent Conversion of
Bankshares, preferred shares
Inc. to common shares $122,556 N/A N/A $0 $122,556 $529,480 $0
(Conversion)
</TABLE>
12
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 31, 1997 INDEPENDENT BANKSHARES, INC.
EMPLOYEE STOCK OWNERSHIP/401(K) PLAN
By: First State Bank, N.A., Abilene, Trustee
By: /s/ Larry Melton
---------------------------------------
Larry Melton
Senior Vice President and Trust Officer
13
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
1.1 Consent of Independent Public
Accountants
14
Exhibit 1.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 11-K into the
Company's two currently effective Registration Statements on Form
S-8 (SEC File Nos. 33-83112 and 333-07567) regarding the Company's
Employee Stock Ownership/401(k) Plan.
/s/ Condley and Company, L.L.P.
Certified Public Accountants
Abilene, Texas
March 25, 1997
