SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______ to ________
Commission File Number 2-78658
INTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Kansas 48-0937376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
105 North Main Street
Box One
Wichita, Kansas 67202
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:(316)383-1111
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
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. X Yes No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ X ]
At February 6, 1995, there were 2,348,220 shares of the
registrant's common stock, par value $5 per share, outstanding.
There is no established public trading market for the
registrant's common stock. Registrant is aware that quotations
for its common stock have become available through the National
Quotation Bureau, Inc. As reported by the National Quotation
Bureau, Inc. as of March 3, 1995, the bid price of $54.50 per
share would indicate an aggregate market value of $84,483,666
for shares held by nonaffiliates.
EXHIBIT INDEX: Part IV hereof.
PART I
ITEM 1. BUSINESS.
GENERAL
INTRUST Financial Corporation, a Kansas corporation (the
"Company"), is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended. The mailing
address of the Company's only office is 105 North Main, Box One,
Wichita, Kansas 67202.
As of the close of business on November 30, 1994, the Company
purchased First Moore Bancshares, Inc., parent company of The
First Bank ("TFB"), a financial institution located in Moore,
Oklahoma and First Moore Insurance Agency, Inc. ("FMIA"), a credit
life insurance agency, also located at The First Bank in Moore,
Oklahoma. Immediately after the purchase First Moore
Bancshares, Inc. was merged into the Company, and TFB and FMIA
became wholly-owned subsidiaries of the Company. Terms of the
acquisition provided for a purchase price of $6,399,000. The
acquisition was accounted for by the purchase method of
accounting. The excess of cost over fair value of net assets
acquired will be amortized using the straight-line method over a
15 year period. At the time of purchase, TFB had $48 million in
assets and $46 million in deposits.
DESCRIPTION OF BUSINESS
As of December 31, 1994, the Company's direct wholly-owned
banking subsidiaries were INTRUST Bank, N.A. ("IB"), Wichita,
Kansas, INTRUST Bank, El Dorado, N.A. ("IBE"), El Dorado,
Kansas, INTRUST Bank, Haysville, N.A. ("IBH"), Haysville,
Kansas, INTRUST Bank, Johnson County, N.A. ("IBJ"), Prairie
Village, Kansas, INTRUST Bank, Valley Center ("IBV"), Valley
Center, Kansas, Will Rogers Bank ("WRB"), Oklahoma City,
Oklahoma, The First Bank ("TFB"), Moore, Oklahoma
(collectively, the "Subsidiary Banks"). On February 11, 1995,
IBE, IBH, IBJ, and IBV were merged into IB. IB is and IBE, IBH,
and IBJ were national banking associations organized under the
laws of the United States. IBV was a state banking association
organized under the laws of Kansas. WRB and TFB are state
banking associations organized under the laws of Oklahoma. The
Subsidiary Banks provide a broad range of banking services to
customers, including checking and savings accounts, NOW
accounts, money market deposit accounts, certificates of
deposit, Individual Retirement Accounts, personal loans, real
estate and commercial loans, investment services, credit cards,
automated teller machines, and safe deposit facilities. In
addition, IB offers fiduciary and trust services, equipment and
automobile leasing, cash management, data processing, and
correspondent bank services to its customers.
The direct and indirect non-banking subsidiaries of the
Company are: First Moore Insurance Agency, Inc. ("FMIA"),
INTRUST Mortgage Corporation of Kansas ("IMC"), KSB Building
Corporation ("KSBBC"), KSB Properties, Inc. ("KSBP") and WRB
Insurance Agency, Inc. ("WRBIA") (collectively, the "Non-Banking
Subsidiaries"). FMIA is a wholly-owned subsidiary of the
Company; IMC, KSBBC and KSBP are wholly-owned subsidiaries of
IB; and WRBIA is a wholly-owned subsidiary of WRB. IMC, located
in Wichita, Kansas, is engaged in the business of mortgage
banking. KSBBC owns, operates and leases space in an office
building in Wichita, Kansas. KSBP owned partial interests in
oil and gas leases that were acquired through foreclosure, all
of which properties were sold in 1994. WRBIA, which is
organized under Oklahoma insurance laws, is a conduit for
selling credit life insurance to customers of WRB.
The Subsidiary Banks and the Non-Banking Subsidiaries are
collectively referred to as the "Subsidiaries".
At December 31, 1994, IB's trust division managed assets with
a market value of $1,184,000,000 in various fiduciary
capacities.
As of December 31, 1994 the Company had 21 full-time
employees. The Subsidiaries collectively had approximately 826
full-time and 89 part-time employees. None of the employees of
the Company or the Subsidiaries are subject to a collective
bargaining agreement. The Company generally considers its
relationships with its employees and the employees of the
Subsidiaries to be good.
The Company and the Subsidiaries do not engage in any other
business.
COMPETITION
Bank holding companies and their subsidiaries encounter
intense competition in all of their activities. As lenders,
banks compete not only with other banks, but also with savings
associations, credit unions, finance companies, factoring
companies, insurance companies and other financial institutions.
They compete for savings and time deposits with other banks,
savings associations, credit unions, mutual funds, money market
funds, and issuers of commercial paper and other securities. In
addition, large regional and national corporations have in
recent years become increasingly visible in offering a broad
range of financial services to all types of commercial and
consumer customers. The Company believes that the principal
competitive factors in its markets for deposits and loans are,
respectively, interest rates paid and interest rates charged.
INTRUST BANK, N.A.
IB's primary service area is Sedgwick County, Kansas, with an
approximate population of 417,000. There are eight other banks
located in Wichita, the largest city in the county. The primary
competition comes from financial institutions located within
one-half mile of IB, specifically, Bank IV Kansas, Union
National Bank, and Emprise Bank. Deposit information is no
longer available for the individual markets in which Bank IV
operates. At December 31, 1994, Bank IV Kansas had total assets
of $5,290,120,000, loans net of unearned income of
$2,519,526,000 and deposits of $3,904,988,000.
The following sets forth certain publicly-available
information concerning IB and its other primary competitors as
of December 31, 1994 (in thousands):
Total Assets Total Loans Total Deposits
INTRUST Bank, N.A. $1,174,133 $840,477 $976,983
Union National Bank 665,677 393,026 506,648
Emprise Bank 288,717 165,202 253,948
INTRUST BANK, EL DORADO, N.A.
IBE's primary service area is the city of El Dorado, Kansas,
of which the population is approximately 11,500. There are two
chartered banks and two branches of Bank IV Kansas in El Dorado.
IBE had total assets of $40,661,000 as of December 31, 1994.
On February 11, 1995, IBE became a branch of IB.
INTRUST BANK, HAYSVILLE, N.A.
IBH's primary service area is the city of Haysville, Kansas,
of which the population is approximately 8,400. There are a
total of two banks in Haysville. IBH had total assets of
$80,867,000 as of December 31, 1994. On February 11, 1995, IBH
became a branch of IB.
INTRUST BANK, JOHNSON COUNTY, N.A.
IBJ's primary service area is Johnson County, Kansas of which
the population is approximately 411,000. There are a total of
26 banks in Johnson County. The primary competition comes from
two branches of Bank IV Kansas and two branches of Mercantile
Bank of Kansas City in Prairie Village. IBJ had total assets of
$83,265,000 as of December 31, 1994. On February 11, 1995, IBJ
became a branch of IB.
INTRUST BANK, VALLEY CENTER
IBV's primary service area is the city of Valley Center,
Kansas, of which the population is approximately 3,600. There
are no other banks in Valley Center. One of the closest banks
is located in Park City, which is about five miles from Valley
Center. IBV had total assets of $43,058,000 as of December 31,
1994. On February 11, 1995, IBV became a branch of IB.
WILL ROGERS BANK
WRB's primary service area is western Oklahoma City, Oklahoma.
The population of this service area is approximately 132,000.
WRB's primary competition comes from six banks located in
Oklahoma City. WRB had total assets of $59,623,000 as of
December 31, 1994.
THE FIRST BANK
TFB's primary service area includes the cities of Moore and
Mustang, Oklahoma, both suburbs of Oklahoma City, Oklahoma. The
combined population of Moore and Mustang is approximately
50,000. TFB's primary competition comes from three other banks
and one bank branch. TFB had total assets of $47,320,000 as of
December 31, 1994.
SUPERVISION AND REGULATION
The Company and the Subsidiary Banks are subject to extensive
regulation by federal and state authorities. Such regulation is
generally intended to protect depositors, not shareholders.
FEDERAL REGULATION OF BANK HOLDING COMPANIES
The Company is a bank holding company within the meaning of
the Bank Holding Company Act of 1956, as amended (the "Act"),
and is registered as such with the Board of Governors of the
Federal Reserve System (the "Board of Governors"). The Board of
Governors may make examinations of the Company and its
subsidiaries, and the Company is required to file with the Board
of Governors an annual report and such other additional
information as the Board of Governors may require pursuant to
the Act.
The Act requires every bank holding company to obtain the
prior approval of the Board of Governors before (i) acquiring
direct or indirect ownership or control of more than 5% of the
outstanding shares of any class of the voting shares or all or
substantially all of the assets of any bank, or (ii) merging or
consolidating with another bank holding company. In determining
whether to approve such a proposed acquisition, merger or
consolidation, the Board of Governors is required to take into
account the competitive effects of the proposed transaction, the
convenience and needs of the community to be served, and the
financial and managerial resources and future prospects of the
bank holding companies and banks concerned. The Act provides
that the Board of Governors shall not approve any acquisition,
merger or consolidation which would result in a monopoly, or
which would be in furtherance of any combination or conspiracy
to monopolize or attempt to monopolize the business of banking
in any part of the United States, or any other proposed
acquisition, merger or consolidation, the effect of which may be
substantially to lessen competition or tend to create a monopoly
in any section of the country, or which in any other manner
would be in restraint of trade, unless the anti-competitive
effects of the proposed transaction are clearly outweighed in
the public interest by the probable effect of the transaction in
meeting the convenience and needs of the community to be served.
In general, a bank holding company and its subsidiaries are not
permitted to acquire any voting stock or all or substantially
all of the assets of any bank principally located outside the
state in which its existing subsidiaries are located unless the
laws of the state of the bank to be acquired specifically permit
such an acquisition.
The Reigle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "IBBEA") authorizes interstate acquisitions of
banks and bank holding companies by qualifying bank holding
companies without geographic limitation beginning September 29,
1995. In addition, beginning June 1, 1997, the IBBEA also
authorizes a bank to merge with a bank in another state as long
as neither of the states has opted out of interstate branching
between the date of enactment of the IBBEA and May 31, 1997.
The IBBEA further provides that states may enact laws permitting
interstate bank merger transactions prior to June 1, 1997. Such
acquisitions and mergers may be subject to such contingencies as
compliance with state age laws and nationwide and statewide
concentration limits. A bank may establish and operate a de
novo branch in a state in which the bank does not maintain a
branch if that state expressly permits de novo branching. Once
a bank has established branches in a state through an interstate
merger transaction, the bank may establish and acquire
additional branches at any location in the state where any bank
involved in the interstate merger transaction could have
established or acquired branches under applicable federal or
state law. A bank that has established a branch in a state
through de novo branching may establish and acquire additional
branches in such state in the same manner and to the same extent
as a bank having a branch in such state as a result of an
interstate merger. If a state opts out of interstate branching
within the specified time period, no bank in any other state may
establish a branch in the opting out state, whether through an
acquisition or de novo.
The Act also prohibits, with certain exceptions, a bank
holding company from engaging in and from acquiring direct or
indirect ownership or control of more than 5% of the outstanding
shares of any class of the voting shares of any company engaged
in a business other than banking, managing and controlling
banks, or furnishing services to its affiliated banks. One of
the exceptions to this prohibition provides that a bank holding
company may engage in, and may own shares of companies engaged
in, certain businesses that the Board of Governors has
determined to be so closely related to banking as to be a proper
incident thereto. In making such determination, the Board of
Governors is required to weigh the expected benefit to the
public, such as greater convenience, increased competition, or
gains in efficiency, against the risks of possible adverse
effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking
practices.
A bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with
the extension of credit or the lease or sale of any property or
the furnishing of any service. Subsidiary banks of a bank
holding company are also subject to certain restrictions imposed
by the Federal Reserve Act on extensions of credit to the bank
holding company or any of its subsidiaries, investments in the
stock or other securities thereof, the taking of such stocks or
securities as collateral for loans and otherwise engaging in
transactions with the bank holding company and its subsidiaries.
These restrictions may limit the Company's ability to obtain
funds from the Subsidiary Banks. In addition, the amount of
loans or extensions of credit that IB, IBH, IBE, IBJ, IBV, WRB
or TFB may make to the Company or to third parties secured by
securities or obligations of the Company are substantially
limited by the Federal Reserve Act and the Federal Deposit
Insurance Act. The Board of Governors possesses cease and
desist and other administrative sanction powers over bank
holding companies if their actions represent unsafe or unsound
practices or violations of the law.
The Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 ("FIRREA") established a cross guarantee provision
pursuant to which the Federal Deposit Insurance Corporation
("FDIC") may recover from a depository institution losses that
the FDIC incurs in providing assistance to or paying off the
depositors of any of such depository institution's affiliated
insured banks. The cross guarantee provision thus enables the
FDIC to assess a holding company's healthy insured subsidiaries
for the losses of any of the holding company's failed insured
members. Cross guarantee liabilities are generally superior in
priority to obligations of the depository institution to its
shareholders due solely to their status as shareholders and
obligations to other affiliates.
The Board of Governors has promulgated "capital adequacy
guidelines" for use in its examination and supervision of bank
holding companies. These guidelines are described in detail
below. A holding company's ability to pay dividends and expand
its business through the establishment or acquisition of new
subsidiaries can be restricted if its capital falls below levels
established by these guidelines. In addition, holding companies
whose capital falls below specified levels can be required to
implement a plan to increase capital.
STATE BANK HOLDING COMPANY REGULATION
Kansas statutes prohibit any bank holding company from
acquiring and voting shares of a bank in Kansas if it would
cause the aggregate deposits held by all of the banks in Kansas
in which a single bank holding company has an interest to exceed
15% of the total deposits of banks and savings institutions in
the state. Such limitation does not apply in situations where
the Kansas state banking commissioner, in the case of a state
bank, or the Comptroller of the Currency ("OCC"), in the case of
a national bank, determines that an emergency exists and the
acquisition is appropriate in order to protect the public
interest against the failure or probable failure of a bank.
Acquisitions by bank holding companies of control of state banks
in Kansas require the approval of the Kansas state banking
commissioner. Beginning July 1, 1992, the Kansas statutes
authorize out-of-state bank holding companies located in states
contiguous to Kansas and in Arkansas and Iowa to acquire voting
shares of banks or bank holding companies domiciled in Kansas.
Subject to certain limited exceptions, Oklahoma law prohibits
a multi-bank holding company from acquiring ownership or control
of any insured financial institution located in Oklahoma if such
acquisition would result in the holding company owning or
controlling banks located in Oklahoma with total deposits in
excess of 11% of the aggregate deposits of all financial
institutions in Oklahoma with deposits insured by the FDIC or
the National Credit Union Administration as determined by the
Oklahoma Bank Commissioner ("OBC"). A bank whose application
for charter was filed, received, or granted after July 1, 1983
cannot be acquired by a multi-bank holding company for a period
of five years; such restriction does not prevent a multi-bank
holding company from acquiring a bank whose charter was granted
for the purpose of purchasing the assets and liabilities of a
bank located in Oklahoma closed by regulators due to insolvency
or impairment of capital. Bank holding companies not located in
Oklahoma may acquire an unlimited number of Oklahoma banks and
bank holding companies upon approval of the Federal Reserve
Board. As of July 1, 1987, any Oklahoma bank or Oklahoma bank
holding company that becomes a subsidiary of a foreign bank
holding company may acquire direct or indirect ownership or
control of additional Oklahoma banks or bank holding companies,
establish additional branches or convert to a branch of an
Oklahoma bank if (i) the principal place of business of the
foreign bank holding company is a reciprocal state, as
determined by the Oklahoma Banking Department ("OBD"), or (ii)
four years have expired since the date of acquisition by the
foreign bank holding company.
Under Oklahoma law, each bank holding company that controls
25% or more of the voting shares of a bank located in Oklahoma
must furnish a copy of its annual report to the Board of
Governors to the OBC.
FEDERAL REGULATION OF SUBSIDIARY BANKS
IB is a national bank, as were IBE, IBH, and IBJ prior to
their merger into IB on February 11, 1995. National banks are
subject to regulation, supervision and examination primarily by
the OCC. They are also regulated, in certain respects, by the
Board of Governors and the FDIC. Prior to February 11, 1995,
IBV was a state nonmember (of the Federal Reserve System),
subject to regulation and examination primarily by the Kansas
Banking Department ("KBD") and FDIC. WRB is an Oklahoma state
nonmember (of the Federal Reserve System) bank, subject to
regulation and examination primarily by the OBD, and by the
FDIC. TFB, which is an Oklahoma chartered state bank and member
of the Federal Reserve System, is regulated primarily by the OBD
and the Board of Governors. Regulation by these agencies is
generally designed to protect depositors rather than
stockholders.
The Federal Deposit Insurance Corporation Improvement Act of
1991 (the "FDIC Improvement Act") provides for, among other
things, the strengthening of internal control and auditing
systems, the enhancement of credit underwriting and loan
documentation standards (particularly with respect to real
estate), the accounting for interest rate exposure and other
off-balance sheet items, restrictions on the compensation of
officers and directors, and the adoption of a risk-based deposit
insurance system.
The FDIC Improvement Act also authorizes the regulator of an
insured depository institution to assess all costs and expenses
of any regular or special examination of the insured depository
institution.
Under the Federal Reserve Act, extensions of credit by a bank
to the executive officers, directors, or principal shareholders
of the bank or its affiliates or any related interest of such
persons must be on substantially the same terms as, and
following credit underwriting procedures that are not less
stringent than, those applicable to comparable transactions with
nonaffiliated persons and must not involve more than the normal
risk of repayment or present other unfavorable features.
The rate of interest a bank may charge on certain classes of
loans is limited by state and federal law. At certain times in
the past, these limitations, in conjunction with national
monetary and fiscal policies which affect the interest rates
paid by banks on deposits and borrowings, have resulted in
reductions of net interest margins on certain classes of loans.
Such circumstances may recur in the future, although the trend
of recent federal and state legislation has been to eliminate
restrictions on the rates of interest which may be charged on
some types of loans and to allow maximum rates on other types of
loans to be determined by market factors.
In addition to limiting the rate of interest charged by banks
on certain loans, federal law imposes additional restrictions on
a national bank's lending activities. For example, federal law
regulates the amount of credit a national bank may extend to an
individual borrower and has in the past subjected real estate
lending activities to rigid statutory requirements. The
Garn-St. Germain Depository Institutions Act of 1982 (the "1982
Act") liberalized federal law with respect to both of these
types of lending activities by increasing the maximum amount of
credit a national bank may extend to an individual borrower and
by simplifying the statutory framework pursuant to which
national banks may extend real estate loans.
The 1982 Act also authorizes banks to invest in service
corporations that can offer the same services as the banking
related services which bank holding companies are authorized to
provide. However, the approval of the OCC must be obtained
before a national bank may make such an investment or perform
such services.
The Board of Governors has issued Community Reinvestment Act
("CRA") regulations, pursuant to its authorization to conduct
examinations and to consider applications for the formation and
merger of bank holding companies and member banks, to encourage
banks to help meet the credit needs of their local communities,
including low and moderate income neighborhoods, consistent with
the safe and sound operation of those banks. The OCC has issued
similar regulations with respect to applications of national
banks, and the FDIC has also issued similar regulations with
respect to applications of banks which are incorporated under
state law and are not members of the Federal Reserve System.
STATE REGULATION OF SUBSIDIARY BANKS
Kansas law prohibits a state chartered bank located in Kansas
from transacting the business of banking other than at the place
specified in its Certificate of Authority or at branch locations
authorized by the Kansas State Banking Board. A Kansas bank may
also install remote service units, also known as automatic
teller machines, throughout the state. Remote service units
which are not located at the principal place of business of the
bank or at a branch location of the bank must be available for
use by other banks and their customers on a non-discriminatory
basis.
All limitations and restrictions of the Oklahoma Banking Code
applicable to Oklahoma chartered banks apply to such banks that
become subsidiaries of a foreign bank holding company. In
addition, Oklahoma chartered banks that are subsidiaries of
foreign bank holding companies are required to maintain current
reports showing the bank's record of meeting the credit needs of
its entire community with the OBD. Subject to approval of the
Oklahoma Banking Board, any Oklahoma bank may maintain and
operate outside attached facilities and two detached facilities
with tellers' windows for drive-in or walk-up service. Of the
two detached facilities, one may be located less than one
thousand feet from the bank's main building and one may be
located less than three miles from the main bank building.
Subject to the approval of the OBB, any branch may maintain and
operate one outside attached facility with tellers' windows for
drive-in or walk-up service. Upon written notice to the OBC, an
Oklahoma state bank may also install and operate consumer
banking electronic facilities. An Oklahoma bank offering such
services to a bank which establishes or maintains a consumer
banking electronic facility must make the use thereof available
to banks located in Oklahoma on a fair and equitable basis of
non-discriminatory access and rates.
Oklahoma banks that are not members of the Federal Reserve
System are required to maintain reserves against deposits as may
be required by the Depository Institutions Deregulation and
Monetary Control Act of 1980 as prescribed by the Board of
Governors. The Oklahoma State Banking Board may change the
reserve requirements of banks which are not members of the
Federal Reserve System if it is determined that the maintenance
of sound banking practices or the prevention of injurious credit
expansion or contraction makes such action advisable.
Oklahoma banks that are members of the Federal Reserve System
are required to maintain such reserves against deposits as may
be required by the Federal Reserve Act, as amended, or by the
Board of Governors.
Notwithstanding any provision of state law, the FDIC
Improvement Act provides that an insured state chartered bank
generally may not make an investment or engage in an activity
that is not permissible for a national bank, unless the FDIC
determines that such investment or activity would not pose a
significant risk to the applicable insurance fund.
CAPITAL REQUIREMENTS
The Board of Governors together with the other federal
regulatory agencies jointly promulgated guidelines defining
regulatory capital requirements based upon the level of risk
associated with holding various categories of assets (the
"Guidelines"). The Guidelines, which are applicable to all bank
holding companies and federally supervised banking
organizations, took effect on March 15, 1989, and were fully
phased into the existing supervisory system as of the end of
1992. Under the Guidelines, balance sheet assets are assigned
to various risk weight categories (i.e., 0, 20, 50, or 100
percent), and off-balance sheet items are first converted to
on-balance sheet "credit equivalent" amounts that are then
assigned to one of the four risk-weight categories. For
risk-based capital purposes, capital is divided into two
categories: core capital ("Tier 1 capital") and supplementary
capital ("Tier 2 capital"). Tier 1 capital generally consists
of the sum of: common stock, additional paid-in capital,
retained earnings, qualifying perpetual preferred stock (within
certain limitations), minority interest in equity accounts of
consolidated subsidiaries; less intangibles, including goodwill
(within certain limitations). Tier 2 capital generally
includes: reserve for possible loan losses (within certain
limitations), perpetual preferred stock not included in Tier 1
capital, perpetual debt, mandatory convertible instruments,
hybrid capital instruments, and subordinated debt and
intermediate-term preferred stock (within certain limitations).
The total amount of Tier 2 capital under the Guidelines is
limited to 100% of Tier 1 capital. The sum of Tier 1 and Tier 2
capital comprises total capital ("Total Capital"). The
Guidelines require minimum ratios of Tier 1 and Total Capital to
risk weighted assets, on a consolidated basis. The minimum
ratios required by the Guidelines are shown below in comparison
with the consolidated ratios of the Company at December 31,
1994. Based on this financial data, the Company's capital
ratios exceed the Guidelines on a consolidated basis. All of
the Subsidiary Banks also exceeded the minimum guidelines at the
individual bank level.
Company
Guidelines Ratios
Tier 1 Ratio 4.0% 9.19%
Total Capital Ratio 8.0% 11.27%
In addition to the Guidelines, the Board of Governors requires
a minimum leverage ratio ("leverage ratio") of Tier 1 capital
(as described above) to total assets of 3 percent. For all but
the most highly rated bank holding companies, the leverage ratio
is to be 3 percent plus an additional cushion of at least 100 to
200 basis points. The Company's consolidated leverage ratio at
December 31, 1994 was 7.10%. Similar requirements also apply to
the Subsidiary Banks and each met the requirements at the
individual bank level.
The FDIC Improvement Act requires all regulators of insured
depository institutions to classify such institutions according
to the following "prompt corrective action" categories: (1)well
capitalized, (2) adequately capitalized, (3)undercapitalized,
(4) significantly undercapitalized or (5) critically
undercapitalized. Undercapitalized, significantly
undercapitalized and critically undercapitalized institutions
may be required to take or to refrain from taking certain
actions, such as, among other things, requiring a
recapitalization or divestiture of subsidiaries or restricting
transactions with affiliates, interest rates on deposits, asset
growth or distributions to parent bank holding companies, until
such institution becomes adequately capitalized. As of the last
classification, all of the Subsidiary Banks were categorized as
"well capitalized".
The Kansas Banking Code requires a minimum capital level of
$250,000 for a state bank in existence on July 1, 1975, which is
applicable to all of the Subsidiary Banks chartered in Kansas.
All of the Kansas-chartered Subsidiary Banks exceeded this
minimum capital requirement.
The minimum capital level for an Oklahoma state bank is based
on the population of the community in which the bank is located.
TFB and WRB exceed the applicable minimum capital requirements
for their communities of $750,000 and $900,000, respectively.
DIVIDENDS
The National Bank Act restricts the payment of dividends by a
national bank generally as follows: (i) no dividends may be paid
which would impair the bank's capital, (ii) until the surplus
fund of a national banking association is equal to its capital
stock, no dividends may be declared unless there has been
carried to the surplus fund not less than one-tenth of the
bank's net profits of the preceding half year in the case of
quarterly or semi-annual dividends, or not less than one-tenth
of the net profits of the preceding two consecutive half-year
periods in the case of annual dividends, and (iii) the approval
of the OCC is required if dividends declared by a national
banking association in any year exceed the total of net profits
for that year combined with retained net profits for the
preceding two years, less any required transfers to surplus.
Kansas law permits dividends to be declared from undivided
profits after first deducting its losses. Before declaration of
any dividend, the bank must transfer 25% of its net profits
since the last preceding dividend to its surplus fund, until the
surplus fund equals the total capital stock of the bank.
No Oklahoma bank may permit the withdrawal, in the form of
dividends or otherwise, of any portion of its capital or
surplus. If losses equal or exceed a bank's undivided profits,
no dividends shall be made and no dividends shall ever be made
by any Oklahoma bank in an amount greater than its net profits
then on hand less its losses and bad debts. The directors of
any Oklahoma bank may declare dividends of so much of the net
profits as they judge expedient, except that until the surplus
fund of a bank equals its common capital, no cash dividends
shall be declared unless there has been carried to the surplus
fund not less than 1/10th of the Bank's net profits of the
preceding half year in the case of quarterly or semi-annual
dividends, or not less then 1/10th of its net profits of the
preceding two consecutive half-year periods in the case of
annual dividends. The approval of the OBC is required if the
total of all dividends declared by a bank in any calendar year
exceeds the total of its net profits of that year combined with
its retained net profits of the preceding two years, less any
required transfers to surplus or a fund for the retirement of
any preferred stock.
DEPOSIT INSURANCE PREMIUMS
On October 1, 1992, the FDIC Board of Directors adopted a new
risk-based deposit insurance system to provide for a transition
between the previous flat-rate system and the risk-related
premium system of the FDIC Improvement Act. On June 17, 1993,
the FDIC adopted the transitional system in permanent form, with
only limited changes.
The permanent risk-based system, which became effective on
January 1, 1994, charges higher insurance rates to those banks
and savings associations that pose greater risks to the deposit
insurance funds. The FDIC places each bank and thrift in one of
nine risk categories using a two step process based on capital
ratios and other relevant information. Each institution is
assigned to one of three groups (well capitalized, adequately
capitalized or undercapitalized) based on its capital ratios. A
well-capitalized institution is one that has at least a ten
percent "total risk-based capital" ratio (the ratio of
qualifying total capital to risk-weighted assets), a six percent
"Tier-1 risk-based capital" ratio (the ratio of Tier 1 or "core"
capital to risk-weighted assets) and a five percent "Tier-1
leverage capital" ratio (the ratio of Tier 1 capital to average
total assets). An adequately capitalized institution must have
at least an eight percent total risk-based capital ratio, a four
percent Tier-1 risk-based capital ratio and a four percent
Tier-1 leverage capital ratio. An institution that does not
meet any of the above requirements is considered
undercapitalized.
The FDIC Improvement Act requires the FDIC to set semi-annual
assessment rates that are sufficient to increase the reserve
ratio for the Bank Insurance Fund ("BIF") to the designated
reserve ratio not later than one year from the date of
determination of the assessment rates.
The FDIC Improvement Act contains a long-term funding plan for
the BIF that will (i) significantly increase the FDIC's
authority to borrow; (ii) expand the sources from which the FDIC
can borrow; and (iii) raise deposit insurance premiums to pay
for such additional borrowing through the imposition of
emergency special assessments.
MONETARY POLICY
The earnings of the Company are affected not only by general
economic conditions, but also by the policies of various
governmental regulatory authorities in the U.S. and abroad. In
particular, the Federal Reserve Board regulates the national
supply of money and credit in order to influence general
economic conditions, primarily through open market operations in
U.S. Government securities, varying the discount rate on member
bank borrowings and setting reserve requirements against
deposits. Federal Reserve monetary policies have had a
significant effect on the operating results of financial
institutions in the past and are expected to continue to do so
in the future.
ITEM 2. PROPERTIES.
INTRUST FINANCIAL CORPORATION AND INTRUST BANK, N.A.
The Company's principal offices and IB's main banking offices
are located at 105 North Main Street and 100 North Main Street,
Wichita, Kansas. Both offices are located in three office
buildings owned by IB. These three buildings together with the
adjacent six-story garage and two-story garage owned by IB,
occupy approximately one city block in downtown Wichita. The
sixth through tenth floors of the building at 105 North Main
Street and fifth through tenth floors of the building at 100
North Main are presently leased by IB to others. The Company
rents office space from IB on the third floor of the building at
100 North Main.
As of December 31, 1994, IB had ten detached branch facilities
in Wichita, Kansas. IB owns the facilities and the land at six
offices. IB owns the facilities at four offices and leases the
land on which such offices are located from unaffiliated
parties.
IB had two small branch offices which serve residents and
staff members of retirement communities located in Wichita,
Kansas.
IB also had offices in seven Dillon supermarkets. The office
space at each of these locations is leased from an unaffiliated
party.
IB had a loan production office in Oklahoma City, Oklahoma and
Tulsa, Oklahoma. Both offices are leased from unaffiliated
parties.
Total square footage of all facilities owned and occupied by
IB, as of December 31, 1994, was approximately 193,500 square
feet.
INTRUST BANK, EL DORADO, N.A.
IBE's main banking offices are located at 100 South Main, El
Dorado, Kansas. IBE also leases an office at a Dillon
supermarket. IBE's main office has total square footage of
approximately 11,850 square feet. As of February 11, 1995, all
offices of IBE became branches of IB.
INTRUST BANK, HAYSVILLE, N.A.
IBH's main banking office is located at 107 Wayne, Haysville,
Kansas. Total square footage of the facility, which is owned by
IBH, is approximately 14,000 square feet. As of February 11,
1995, the IBH office became a branch of IB.
INTRUST BANK, JOHNSON COUNTY, N.A.
IBJ's main banking office is located at 4000 Somerset Drive,
Prairie Village, Kansas. IBJ also has one detached facility and
an office in a Dillon supermarket. IBJ owns the main office
building and leases the land where the main office building is
located as well as the other two offices. Total square footage
of all facilities is approximately 20,270 feet. As of February
11, 1995, all offices of IBJ became branches of IB.
INTRUST BANK, VALLEY CENTER
IBV'S main banking office is located at 142 North Ash, Valley
Center, Kansas. Total square footage of the facility, which IBV
owns, is approximately 11,000 square feet. As of February 11,
1995, the IBV office became a branch of IB.
WILL ROGERS BANK
WRB's main banking office is located at 5100 Northwest Tenth,
Oklahoma City, Oklahoma. Total square footage of the facility,
which is owned by WRB, is approximately 23,550 square feet.
THE FIRST BANK
TFB'S main banking office is located at 100 S. Broadway,
Moore, Oklahoma. TFB also has a detached branch facility in
Mustang, Oklahoma. TFB owns both buildings, the total square
footage of which is approximately 19,000 square feet.
All facilities owned by the Company and the Subsidiary Banks
are maintained in good operating condition and are adequately
insured. The Company considers its properties and those of the
Subsidiary Banks to be satisfactory for their current
operations.
ITEM 3. LEGAL PROCEEDINGS.
There are no legal proceedings pending against the Company.
Certain of the subsidiaries of the Company are parties in a
variety of legal proceedings, none of which is considered to be
material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's security
holders during the fourth quarter of 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The common stock of the Company is traded in the local
over-the-counter market on a limited basis. Transactions in the
common stock are relatively infrequent. The following table
sets forth the per share high and low bid quotations for the
periods indicated as reported by the National Quotation Bureau,
Incorporated (NQB).
-----1994---- -----1993----
High Low High Low
1st Quarter $48 $48 $44 $44
2nd Quarter 50 48 44 44
3rd Quarter 54 50 46 44
4th Quarter 54 54 48 46
The quotations in the above table reflect inter-dealer
quotations, without retail mark-up, mark-down, or commission and
may not necessarily represent actual transactions. On February
6, 1995, there were 472 stockholders of record for the 2,348,220
shares of outstanding common stock. Approximately 78% of the
shares are held by Kansas resident individuals, institutions or
trusts, with the remainder held by residents of thirty-two other
states, with no singular concentrations. In 1994, the Company
received cash dividends in the amount of $15,000,000, $250,000,
$200,000, $1,500,000 and $500,000 from five of its subsidiaries,
IB, IBV, IBE, IBH, and WRB, respectively. The Company declared
cash dividends of $5,914,835, or $2.50 per share during 1994 and
$3,573,610, or $1.50 per share during 1993. Dividend declaration
dates were January 11, April 12, July 12, October 11 and
December 13, 1994. During 1993, dividend declaration dates
were January 12, April 13, July 13, October 12 and December 14.
The payment of dividends by the Company is dependent upon
receipt of cash dividends from the Subsidiary Banks. Regulatory
authorities can restrict the payment of dividends by national
and state banks when such payments might, in their opinion,
impair the financial condition of the bank or otherwise
constitute unsafe and unsound practices in the conduct of
banking business. Additional information concerning dividend
restrictions may be found in the "Notes to Consolidated
Financial Statements" (note 13) and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
under topic titled "Liquidity and Asset/Liability Management".
The priorities for use of cash dividends paid to the Company
will be the quarterly interest payments to holders of
$12,000,000 in 9% Convertible Subordinated Capital Notes due
1999, and the quarterly interest payments and annual principal
payment on the variable rate note payable to Boatmen's First
National Bank of Kansas City. Additional information concerning
the Capital Notes and Boatmen's note may be found in the "Notes
to Consolidated Financial Statements" (notes 8 and 9). The
Company's Board of Directors will continue to review the cash
dividends on common stock each quarter with consideration given
to the earnings, business conditions, financial position of the
Company and such other factors as may be relevant at the time.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA.
INTRUST Financial Corporation and Subsidiaries
Five Year Summary of Selected Financial Data
Dollars in thousands except per share data
<CAPTION>
Years Ended December 31, 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operations:
Interest income $110,383 $98,825 $96,313 $104,727 $92,133
Interest expense 38,267 34,253 38,368 55,130 51,879
Net interest income 72,116 64,572 57,945 49,597 40,254
Provision for loan losses 2,962 5,596 8,906 10,800 7,271
Net interest income after provision
for loan losses 69,154 58,976 49,039 38,797 32,983
Other income 26,888 24,224 20,565 17,089 15,637
Other expenses 66,189 57,420 47,224 43,499 34,233
Income before income taxes 29,853 25,780 22,380 12,387 14,387
Provision for income taxes 10,884 8,154 6,546 3,290 3,340
Income before cumulative effect of
accounting change 18,969 17,626 15,834 9,097 11,047
Cumulative effect of accounting change 0 0 1,679 0 0
Net income $ 18,969 $17,626 $17,513 $ 9,097 $11,047
Average shares outstanding 2,371,377 2,381,859 2,395,694 2,399,844 2,400,000
Per share data assuming no dilution:*
Income before cumulative effect of
accounting change $8.00 $7.40 $6.61 $3.79 $4.60
Cumulative effect of accounting change 0 0 .70 0 0
Net income $8.00 $7.40 $7.31 $3.79 $4.60
Per share data assuming full dilution:*
Income before cumulative effect of
accounting change $7.10 $6.59 $5.92 $3.50 $4.18
Cumulative effect of accounting change 0 0 .60 0 0
Net income $7.10 $6.59 $6.52 $3.50 $4.18
Cash dividends per share $2.50 $1.50 $2.00 $1.25 $1.25
Balance sheet data at year-end:
Total assets $1,519,117 $1,523,868 $1,251,610 $1,214,315 $1,144,064
Total deposits 1,276,076 1,283,284 1,066,323 1,027,273 957,951
Long-term notes payable 22,950 25,580 700 815 1,038
Convertible capital notes 12,000 12,000 12,000 12,000 12,000
Stockholders' equity 127,590 115,529 101,616 89,470 83,433
Book value per share 54.01 48.51 42.62 37.30 34.76
* See note 1(h) of notes to Consolidated Financial Statements
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
FINANCIAL OVERVIEW
The 1994 net income of INTRUST Financial Corporation established
a new record for the organization. Earnings increased to
$18,969,000, or $8.00 per share. This represents an increase of
7.6% over 1993 levels.
A number of factors contributed to the Company's increased
profitability. The interest rate environment continued to be
generally favorable, although interest margins have begun to
tighten and it is anticipated that they will continue to do so
in 1995. The overall quality of the loan portfolio continued to
improve, reflecting a general strengthening of economic
activity. This improvement resulted in a reduction in the
provision for loan losses from 1993 levels. The Company also
benefited by the inclusion of the assets and liabilities of the
former Kansas State Bank and Trust Company ("KSB&T") in its
operations for a full year in 1994 versus six months of
post-merger activity in 1993.
In February, 1995, the Company elected to consolidate the
banking operations of its five Kansas banking subsidiaries,
INTRUST Bank, N.A.; INTRUST Bank, El Dorado, N.A.; INTRUST Bank,
Haysville, N.A.; INTRUST Bank, Johnson County, N.A.; and INTRUST
Bank, Valley Center into a single entity - INTRUST Bank, N.A.
The Company believes this consolidation will enhance customer
convenience and provide the opportunity for additional operating
efficiencies.
ASSET QUALITY AND PROVISION FOR LOAN LOSSES
The amount charged to the Company's earnings to provide for an
adequate allowance for loan losses is determined after giving
consideration to a number of factors. These include, but are
not limited to, management's assessment of the quality of
existing loans, changes in economic conditions, evaluation of
specific industry risks, the need to support projected loan
volumes and a provision for the timely elimination of
uncollectible receivables. A detailed analysis of the allowance
for loan losses is conducted quarterly.
The Company's loan portfolio continued to perform favorably in
1994, even though the Company altered the composition of the
loan portfolio during the year, reflecting a conscious effort to
increase its consumer lending portfolio. As a result of this
increased emphasis, installment lending, which consists
principally of credit card outstandings and loans secured by
automobiles, increased approximately $106,755,000 from prior
year-end levels and accounted for 44.8% of total loans as
compared to 37.7% of total loans at December 31, 1993. Credit
card outstandings increased 23% from a 1993 level of average
outstandings of $151 million to 1994's average of $186 million,
while average outstandings of other installment loans, which
consist principally of loans secured by automobiles, increased
approximately 36%, reflecting the relatively strong demand for
automobiles that existed in 1994.
Nonperforming loans in the Company's credit card operations
generally comprise a somewhat higher percentage of total credit
card outstandings than are experienced in the remainder of the
loan portfolio. Nonaccrual, past due and restructured loans at
December 31, 1994 increased nominally from 1993 levels, to .59%
of total year-end loans, from .53% of total year-end loans at
December 31, 1993. The corresponding percentage at December 31,
1992 was .83%. The Company's allowance for loan losses at
year-end was equal to 318% of nonaccrual , past due and
restructured loans. The comparable 1993 percentage was 421%.
The allowance for loan losses equaled 1.88%, 2.24% and 2.13% of
total loans outstanding at December 31, 1994, 1993 and 1992,
respectively.
As previously noted, the Company's loan quality benefited by the
continued economic strengthening of the communities in which it
operates. This improvement in loan quality resulted in a
significantly lower provision for loan losses in 1994 than had
been recorded in previous years. INTRUST recorded a provision
for loan losses of $2,962,000 in 1994, a $2,634,000 decline from
the amount recorded in 1993 and a decline of $5,944,000 from
1992 levels.
Net charge-offs in 1994 totaled $5,033,000 as compared to
$3,481,000 in 1993 and $7,259,000 in 1992. The increase in
charge-offs in 1994 is primarily attributable to the Company's
increase in its credit card outstandings. Credit card losses
comprise the largest source of charge-offs by INTRUST. Net
charge-offs in the credit card portfolio in 1994 were $4.9
million as compared to $3.9 million in 1993 and $4.9 million in
1992. The Company believes its ratio of net credit card
charge-offs to average outstandings of 2.6% compares favorably
to that achieved by other similar credit card issuers.
The largest single net charge-off during 1994 was to a
commercial enterprise. No trends were noted during the year
that would point to particular exposure issues with respect to a
given industry or segment of the loan portfolio. Management
believes the allowance for loan losses to be adequate at this
time. Please refer to Table 9, Summary of Loan Loss Experience,
for additional information.
Management is not aware of issues that would significantly
impact the overall credit quality of the loan portfolio in 1995.
However, with the increase in the Company's consumer lending
portfolio, it is anticipated that the provision for loan losses
will return to more traditional levels, causing some reduction
in the Company's net interest income after provision for loan
losses.
NET INTEREST INCOME
INTRUST's net interest income increased $7.5 million, or 11.7%
over the 1993 amount, to $72,115,000. This follows an 11.4%
increase in 1993's net interest income over comparable 1992
amounts. As in 1993, the current year increase was principally
volume-driven, as the Company experienced a 9 basis point
decline in its net yield on interest-earning assets. The
increase in average interest-earning assets reflects the
mid-year acquisition of KSB&T in 1993. At acquisition date,
approximately $304,000,000 in earning assets were acquired by
the Company. Having these assets in place during all of 1994
resulted in higher levels of earning assets when compared to
1993. As noted in 1993, these acquired assets positively
impact the net interest margin, but the fact that these assets
were revalued to their market value at the acquisition date
negatively effected the overall yield on the Company's earning
assets. This effect was more pronounced on the Company's
investment portfolio than on its loan portfolio, as many of the
acquired loans either carried a variable interest rate or had
been priced by KSB&T at rates that were close to those present
in the marketplace at acquisition date.
As noted earlier, INTRUST decided in 1994 to increase its
consumer lending portfolio in order to take advantage of the
demand in the markets it serves, and to invest in loan products
which offered a more attractive investment alternative than did
the investment securities market during much of the year. This
modification in balance sheet composition served to moderate the
downward trend in yields on interest-earning assets.
The interest rate environment present in 1994 resulted in a
correspondingly greater impact on the Company's interest-earning
assets than on its interest-bearing liabilities. The effect on
net interest income attributable to changes in interest rates
was a decrease of $3.5 million, as proportionately more
interest-earning assets repriced downward at greater interest
rate differentials. A similar situation existed in 1993. The
upward movement in interest rates experienced in 1994 will
impact the Company in 1995. The Company anticipates that rate
variances will continue to exert pressure on the interest margin.
The overall yield on average total interest-earning assets
declined 22 basis points from 1993 levels. The largest
component decline in earning asset yields occurred in the
investment security portfolio. The portfolio continued to be
impacted by the marking of the acquired KSB&T portfolio to
market at mid-year 1993. This resulted in a significant portion
of the Company's investment portfolio being carried at yields
that were present in July, 1993, which was a relatively low
interest rate environment. In addition, yields on the Company's
securities either maturing or being called in 1994. Partially
offsetting the decline in yields in the investment portfolio was
the change in composition of earning assets, as more funds were
invested in relatively higher interest earning consumer lending
opportunities. During 1994, 72.3% of INTRUST's average earning
assets were invested in loans, compared with 67.4% in 1993 and
62.9% in 1992. This resulted in loans as a percentage of
deposits averaging 76.5% in 1994, compared to 70.9% in 1993, and
67.4% in 1992.
The continued low interest rate environment of 1994 affected the
Company's funding structure. While average total deposits grew
$149.7 million, there would have been a decline in average
deposits had the deposit liabilities assumed in the KSB&T
acquisition been on hand for a full year in 1993. The Company
experienced similar results in 1993, when average total deposits
would have declined had not the KSB&T acquisition occurred
during the year. As more fully disclosed elsewhere in this
analysis, the Company securitized and sold certain credit card
receivables in December, 1994 to provide additional funding to
support loan growth.
The general interest rate increases promulgated by the Federal
Reserve in 1994 have resulted in an interest rate environment
that has seen some funds shift into time deposit instruments.
This shift to higher-costing deposit instruments will serve to
increase the Company's funding costs. While deposit run-off has
moderated recently as interest rates have risen, the Company
expects competition for traditional retail deposits to continue
to intensify. During 1993 and 1992 the Company experienced a
shift out of longer-term time deposit instruments and into
demand deposits.
The Company currently expects the interest rate environment in
1995 to be similar to that experienced in 1994, with interest
margins continuing to experience some contraction and
competition for traditional retail deposits to be significant.
Management will continue to place a major emphasis on the
maintenance of net interest margins within the overall framework
of sound interest-rate risk management.
NONINTEREST INCOME
Noninterest income increased 11.0%, or $2,664,000, in 1994 to
$26,888,000. This compares to a 17.8% increase in 1993. In
1993 much of the increase realized in noninterest income was
volume related, arising from increased service charge income on
deposit accounts, as INTRUST acquired a number of new deposit
relationships with the KSB&T merger. While having the account
relationships acquired in mid-year 1993 in place for all of 1994
was the principal reason for the 4.9% increase in service
charges on deposit accounts and the 7.3% increase in other
service charges, fees and income, the Company's credit card
business was the principal contributor to the overall increase
in noninterest income.
Bankcard fees increased $1,470,000 or 38.7% over comparable 1993
amounts. The growth in this income statement line item in 1993
as compared to 1992 was 1.4%. As noted last year, because of
uncertainties in the economy in 1992, the Company elected to
temper the growth in its credit card portfolio for much of 1993
and to carefully review the credit quality of all new credit
card account relationships. In the fourth quarter of 1993, the
Company put into place certain marketing programs that were
designed to reverse the decline in credit card outstandings.
As mentioned above, average credit card outstandings increased
23% in 1994. This increase in volume resulted in increased fee
income in both the cardholder and merchant portions of the
credit card business. Increases in merchant and cardholder
interchange fees relate to purchase volume, while certain other
cardholder fees are account-specific. During 1994, certain fees
were earned as cardholders transferred balances from other
issuers to their INTRUST accounts. These type fees on these
specific accounts will not recur in 1995. The Company
anticipates the credit card business will continue to be very
competitive, as new pricing mechanisms continue to be introduced
in the marketplace.
The Company's trust fee revenue is driven in large part by the
performance of the equity markets. 1994 saw a reasonably
lackluster performance in these markets, with the Dow Jones
Industrials closing the year up 2.1%. Thus, the increase in
1994 trust fee revenue of $363,000 or 6.9% in 1994, was due
principally to the establishment of new account relationships
and the full-year impact of the former KSB&T trust customers.
Trust fee revenue in 1993 increased 11.8% , or $554,000, over
1992 levels as trust results were impacted by the KSB&T merger
and the new customer relationships that arose.
NONINTEREST EXPENSE
Noninterest expenses in 1994 increased $8,769,000, or 15.3% over
1993 levels. This follows increases of 21.6% and 8.6% in 1993
and 1992, respectively. The principal cause of the 1994
increase was incurring a full year of operational support of the
assets acquired and liabilities assumed in the KSB&T merger.
Other areas that resulted in increased expenses to the Company
were increased promotional and marketing efforts in the credit
card business, increased data processing costs, and increased
intangibles amortization.
Salaries and employee benefits increased $2,139,000, or 8.1% in
1994, reflecting the employment by the merged bank of former
KSB&T personnel for a full year in 1994. Employment levels
generally remained flat in 1994 when compared to the prior year.
At the end of 1994, the Company had a total staff (on a
full-time equivalent basis) of 892, as compared to 861 and 733
at the end of 1993 and 1992, respectively. The increase in 1994
year-end staffing levels is attributable to the Company's
acquisition of First Moore Bancshares, in December, 1994.
Total compensation costs were nominally impacted by the First
Moore acquisition (less than $100,000) and also by certain
severance costs paid to employees in conjunction with the
Company's consolidation of its Kansas banking entities. Salary
and employee benefit costs in 1994 represented 1.85% of average
total assets, as compared to a 1993 percentage (excluding
merger-related severance costs) of 1.89%. The comparable 1992
percentage was 1.82%.
Salaries and employee benefit costs increased $5,240,000, or
24.8% in 1993, as the financial statements reflected a full
year's operation of a banking subsidiary acquired in late 1992,
severance costs incurred in conjunction with the KSB&T merger,
and the operation and support of the facilities and
relationships acquired during that merger.
Net occupancy expenses increased $872,000, to $7,599,000 in 1994
after increasing $1,281,000 to $6,727,000 in 1993. The majority
of the 1994 increase is attributable to depreciation recognized
on fixed assets acquired during 1993 and 1994 (including the
fixed assets acquired in the KSB&T merger). The Company has
continued to invest in technology equipment and software during
1994. Approximately one-half of the 1993 increase in occupancy
expense is attributable to the operation of facilities that were
not included in the Company's operations in 1992. Certain
investments were also made in technology equipment and software
during 1993, resulting in increased depreciation and
amortization.
Other noninterest expenses increased $5,758,000, or 23.7% from
1993 levels. The Company's decision to actively solicit new
credit card customers resulted in a significant increase in
advertising and promotional activities. This expense category
increased $2,704,000 in 1994, as INTRUST engaged in national
marketing of its credit card business. Data processing expenses
increased $732,000, or 17.3% from 1993 levels. During 1994, the
Company elected to make certain changes in its data processing
activities and to change its existing data processing provider.
The Company believes increased efficiencies will result from the
change in data processing platforms, but cost savings in data
processing will probably not be evident until 1996, as the
Company undertakes numerous conversion activities in 1995.
INTRUST's 1994 amortization of intangibles increased $551,000,
reflecting a full year of amortization of the cost of net
assets acquired in the KSB&T merger. Another factor contributing to
the increase in other noninterest expenses were costs associated
with the Company's securitization of credit card receivables.
The Company also saw increases in 1994 in postage and deposit
insurance assessment costs, reflecting an increased customer base
that was present for the entire year.
Other noninterest expenses increased $3,675,000 or 17.8%, from
1992 levels. While data processing and advertising and
promotional costs played a large part in the 1993 increase, the
increases in these expense categories were for different reasons
than experienced in 1994. The $683,000 increase in data
processing expense in 1993 resulted from increased account
volumes realized after the KSB&T acquisition and additional data
processing costs incurred in conjunction with the conversion of
data processing systems during the acquisition. Advertising and
promotional activities increased $1,089,000 from 1992 levels as
additional amounts were expended on the Company's name change
and acquisition of KSB&T.
Included in other noninterest expenses are the Company's
payments to Systematics, Inc. and M&I Data Services for data
processing services and to First Data Resources, Inc. for
bankcard processing.
Just as is the increase in noninterest income and the
maintenance of net interest income, the control of noninterest
expense is a significant goal of the Company's management.
CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk are monitored on a continuous
basis by the Company. The Company's principal service area has
been identified as the Wichita MSA. Credit risk is therefore
dependent on the economic vitality of this region. Within the
region, credit risk is widely diversified and does not rely upon
a particular industry, segment or borrower. A relatively stable
economic environment was present in the region during 1994. The
Company believes a similar climate will be present in 1995. To
a lesser extent, the Company is also actively involved in
certain areas of Oklahoma and the Kansas City area through the
operations of its subsidiaries located in Oklahoma City,
Oklahoma and Prairie Village, Kansas.
The Company does not believe there are any significant
concentrations of risk in the commercial, financial and
agricultural loan portfolio. Food service industry customers
are the largest single class of borrowers. That risk is spread
among a number of borrowers who are involved in a variety of
types of food service in a number of geographic markets
throughout the United States. Each loan is analyzed
independently based upon the financial risk in that particular
situation.
Consumer credit is comprised of credit card and installment
loans, and represents the largest concentration of overall risk
in the loan portfolio. The company experienced significant
increases in this portion of its loan portfolio in 1994. In
large part, installment receivables represent loans made to
acquire automobiles and are secured by the automobile. Credit
card receivables are represented by Mastercard and VISA
customers, and are unsecured. The majority of consumer credit
is extended in the service areas previously described, although
the Company has broadened the geographic area that it is
marketing its credit card products to. The Company's categories
of consumer credit have performed better than national averages
with respect to delinquencies and net charge-offs. The Company
does not believe this category represents an excessive
concentration of risk. The volume and risk in these loans is
continuously evaluated and reflected in the allowance for loan
losses.
During the past two years, and as a matter of general credit
policy, the Company has not participated in either real estate
mortgage loans (either construction or permanent loans) outside
the service area described above or loans defined as highly
leveraged transactions (HLT's).
OFF-BALANCE-SHEET RISK
Off-balance-sheet risk of the Company consists principally of
the issuance of commitments to extend credit and the issuance of
letters of credit. During the past two years, the Company has
not entered into any financial instruments of a derivative
nature that involve other off-balance-sheet market or credit
risks, such as interest rate swaps, futures, options or similar
types of instruments. However, the Company has entered into
two credit card securitization transactions. The securitization
of credit card receivables allows the Company to free up capital
for other uses and to more effectively manage its balance sheet.
One floating rate transaction in the amount of $50,000,000 was
consummated in December, 1994. A second fixed rate
transaction, also for $50,000,000 was concluded in January,
1995. Neither the credit card receivables sold or the
securities outstanding are defined as financial instruments of
the Company, but the Company continues to service the related
credit card accounts. The Company no longer recognizes net
interest income and certain fee revenue, nor does it provide for
loan losses on the securitized portfolio. Instead, servicing
fee income is received by the Company.
At December 31, 1994, the aggregate amount of commitments to
extend credit outstanding was $230,190,000. Comparable amounts
at December 31, 1993 and 1992 were $171,966,000 and
$135,631,000, respectively. At December 31, 1994, the aggregate
amount of letters of credit outstanding was $29,573,000
compared to $24,220,000 at December 31, 1993 and $16,872,000 at
December 31, 1992.
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses. Since many of
the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future
cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation
of the counter-party.
Letters of credit consist of two principal types: commercial and
standby. Commercial letters of credit are generally issued to
facilitate the flow of commercial transactions, generally to
finance goods in transit. Standby letters of credit are used to
ensure the performance of obligations in some future period.
Letter of credit expirations generally do not run beyond one
year from the date of issuance.
The issuance of letters of credit is governed by the same
underwriting standards as are applicable in any other credit
transaction. Some are secured, others are supported by the
general credit standing of the obligor. Liabilities under
letters of credit are evaluated on a continuing basis, as are
all other loans in the credit review process.
INVESTMENT PORTFOLIO RISK
Analysis of the investment portfolio is included in Table 4,
Investment Portfolio, and Table 5, Maturities and Yield
Analysis. The Company has the ability, and management has the
intent, to hold investment securities to maturity. The Company
does not maintain a trading account or engage in trading
activities. On occasion, maturities will be pre-funded.
Pre-funding occurs within a short period prior to the maturity
of the maturing obligations.
Management believes the average maturity of the Company's
investment security portfolio to be shorter than peer group
averages and that maintenance of a portfolio of this duration
substantially reduces interest rate risk. The Company
maintains a conservative investment strategy and believes the
diversification of the portfolio results in very little credit
risk existing in the portfolio.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The principal functions of asset/liability management are to
provide adequate liquidity, maintaining a reasonable and prudent
relationship between rate sensitive assets and liabilities and
to continuously evaluate risks, including interest-rate risks.
Adequate liquidity is described as "the ability of the Company
to provide funds to appropriately meet normal loan extensions,
and at the same time, meet deposit withdrawals." A variety of
funding sources are available to the Company, including core
deposit acquisition, Federal funds purchases, acquisition of
public funds and the normal run-off of interest-earning assets.
The day-to-day liquidity needs of the Company are primarily met
by the management of the Federal funds position. Adjustments in
the Company's net Federal funds position have historically been
sufficient to meet liquidity needs. As previously noted, and as
described in Table 5, the Company's investment portfolio carries
a relatively short weighted-average maturity. INTRUST has
contractual maturities of investment securities in the next year
of $121,595,000. Interest rate risks are minimized by the
maintenance of this relatively short-term investment position,
and the normal run-off of these investment securities provides a
secondary source of liquidity for the Company. In addition, a
significant portion of the loan portfolio is comprised of
installment instruments that provide an additional source of
liquidity through their normal run-off. As previously discussed
in this analysis, the Company securitized and sold certain
credit card receivables in December, 1994 and January, 1995.
Proceeds from these transactions provide additional sources of
liquidity.
A major component of the asset/liability management process is
the focus on the control of interest rate exposure. Emphasis is
placed on maintenance of acceptable net interest margins in
various interest rate environments, and in providing the Company
the ability to change interest rates should market circumstances
warrant. The following table presents, at December 31, 1994,
the Company's interest rate sensitivity based on contractual
maturities. Management believes the sensitivity and gap ratios
reflected in this table result in acceptable management of
interest rate exposure.
<TABLE>
INTEREST RATE SENSITIVITY
<CAPTION>
December 31, 1994 1 to 90 91 to 180 181 to 365 1 to 2 Over
(Dollars in thousands) Days Days Days Years 2 Years Total
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Net Loans $622,013 $37,165 $37,699 $ 57,880 $283,187 $1,037,944
Investment Securities 41,550 24,174 55,871 91,845 63,339 276,779
Federal funds sold 33,805 - - - - 33,805
Total interest-earning assets $697,368 $61,339 $93,570 $149,725 $346,526 $1,348,528
Interest-bearing liabilities:
Interest-bearing deposits $622,255 $84,954 $90,542 $77,392 $132,582 $1,007,725
Federal funds purchased 56,987 - - - - 56,987
Other borrowings 33,306 - 140 150 12,160 45,756
Total interest-bearing
liabilities $712,548 $84,954 $90,682 $ 77,542 $144,742 $1,110,468
Interest rate sensitivity ($15,180) ($23,615) $ 2,888 $ 72,183 $201,784
Cumulative interest rate sensitivity ($15,180) ($38,795) ($35,907) $ 36,276 $238,060
Cumulative interest rate sensitivity
gap as a percentage of total asset (1.00)% (2.55)% (2.36)% 2.39% 15.67%
Cumulative ratio of interest-
sensitive assets to interest-
sensitive liabilities 97.87% 95.14% 95.96% 103.76% 121.44%
</TABLE>
The Company's ability to pay dividends on its common stock and
interest on its capital notes is primarily dependent upon funds
provided by dividends from the subsidiary banks. The payment of
dividends by the subsidiaries is restricted only by regulation.
At December 31, 1994, approximately $19,997,000 was available
from the subsidiaries' retained earnings for distribution as
dividends to the Company in future periods without regulatory
approval. The availability of dividends from the subsidiary
banks combined with cash balances maintained by the parent
company at December 31, 1994 provide the parent company with
sufficient liquidity to meet its needs.
CAPITAL ADEQUACY
Capital strength is important to the success of INTRUST
Financial Corporation. Capital strength promotes depositor and
investor confidence and provides a solid foundation for future
growth. At December 31, 1994, the Company's capital position
exceeded all regulatory requirements. The Company must maintain
a minimum ratio of total capital to risk-weighted assets of 8%,
of which at least 4% must qualify as Tier 1 capital. At
December 31, 1994, the Company's total capital to risk-weighted
assets was 11.3% and its Tier 1 capital to risk-weighted assets
ratio was 9.2%. These ratios were 11.3% and 8.9%, respectively
in 1993. While the Company's total year-end stockholders'
equity has increased 10.4% from 1993 levels, there has not been
much movement in the aforementioned capital ratios. This is
caused by a shift in the composition of the balance sheet. At
December 31, 1993, the Company had 17.7% of its total assets
invested in U.S. Government and Federal Agency securities, which
carry risk weights of either 0% or 20%. In 1994, that
percentage had declined to 14.2%, as INTRUST had shifted its
investments into loans, which generally have a risk weight of
100%. In addition to the aforementioned regulatory requirements, each
of the Company's Subsidiary Banks met all capital requirements
required at the individual bank level.
One of the many components that must be considered in the
computation of regulatory capital amounts is the realization of
the deferred tax asset balance maintained by the Company. As
can be seen in the accompanying financial statements, the
Company's profitability over the last three years is sufficient
to support the realization of the recorded deferred tax asset.
Dividends declared in 1994 were $5,915,000 ($2.50 per share).
Dividends of $3,574,000 ($1.50 per share) and $4,783,000 ($2.00
per share) were declared in 1993 and 1992, respectively. The
Company, over the last three years, has retained $38.1 million
in net earnings, adding substantially to its strength and
capital position.
FAIR VALUE OF FINANCIAL INSTRUMENTS
As discussed in the accompanying financial statements, the
Company has disclosed estimated fair values for its financial
instruments. As noted in the financial statements, no ready
market exists for a significant portion of the Company's
financial instruments, and a precise determination of the fair
value of these instruments, in the absence of a ready market,
cannot be made.
The estimated fair value (as computed) of its financial assets
exceeded the book value of those assets by approximately $6.5
million. Such difference was $23.4 million in 1993. The
year-over-year change is due to the increasing interest rate
environment present in 1994. As interest rates rose during
1994, the fair value of the Company's interest-earning assets
declined. The fair value of investment securities that had been
purchased during a period of lower interest rates declined, as
did loans which reprice at intervals that lag the actual 1994
interest rate movements. As previously noted, a significant
portion (43.9%) of the Company's investment portfolio will
mature during 1995. The fair value of loans exceeds their
carrying value by $9,471,000 and represents a .91% premium over
book value. As the fair value of loans is based on discounting
scheduled cash flows, the premium is largely attributable to
loans originated during a period when interest rates exceeded
those presently being charged.
The estimated fair value of financial liabilities at December
31, 1994 exceeded their book value by $6.9 million. This
difference was $13.4 million in 1993. The amount that the book
value of time deposits exceeds fair value, of approximately $2.7
million, arises because certain time deposits were obtained
during a period of lower interest rates, and as interest rates
have risen, the scheduled cash flows of these instruments are
less than the cash flows that would be anticipated at current
market rates. The difference in the fair value and book value
of the Company's convertible capital notes, of approximately
$9.6 million, reflects the fact that the coupon on the debt is
currently above market interest rates and that the common stock
conversion price is significantly below the current market price
of the Company's common stock.
INFLATION AND CHANGING PRICES
The impact of inflation on financial institutions differs from
that exerted on other types of commercial enterprises. INTRUST
Financial Corporation has a relatively small portion of its
resources invested in capital or fixed assets. The majority of
its assets are monetary in nature. For this reason, changes in
interest rates are a primary factor in determining their value.
Fluctuations in interest rates and efforts by the Federal
Reserve Board to regulate money and credit conditions have a
greater effect on the Company's profitability than do the
effects of higher costs for goods and services.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 114, "Accounting
by Creditors for Impairment of a Loan" is effective for fiscal
years beginning after December 15, 1994. This Statement was
amended in October, 1994 by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures." As amended, these
Statements specify how the allowance for credit losses related
to certain loans should be determined. The Statements do not
apply to large groups of smaller-balance homogeneous loans that
are collectively evaluated for impairment. In the Company's
case, approximately 44% of the loan portfolio is not subject to
the provisions of these Statements. While there may be certain
procedural issues to be addressed by the Company relative to the
recognition and measurement of impairment so as to comply with
the provisions of these Statements, the relative quality of the
loan portfolio and the loss coverage presently existing in the
allowance for loan losses appear, in the Company's opinion, to
indicate that adoption of Statements 114 and 118 will not have
a material effect on its financial statements.
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities" became
effective for fiscal years beginning after December 15, 1993.
The Statement prescribes the accounting and reporting for
investments in equity securities that have readily determinable
fair values and for all investments in debt securities. Debt
securities that the Company has the positive intent and ability
to hold to maturity are classified as held to maturity
securities and reported at amortized cost. The Company has no
trading securities. Securities not considered held to maturity
securities or trading securities are classified as available for
sale and reported at fair value. Unrealized gains and losses on
these securities are reported as a separate component of
stockholder's equity. As noted above, the Company has the
positive intent and ability to hold to maturity its investment
securities and has reported its investment securities at
amortized cost in accordance with the provisions of Statement
115.
Statement of Financial Accounting Standards No. 119,
"Disclosures about Derivative Financial Instruments and Fair
Value of Financial Instruments" was effective for fiscal years
ending after December 15, 1994. The Statement prescribes the
disclosure and reporting requirements for off-balance sheet
derivative financial instruments such as futures, forwards,
swaps, option contracts and other financial instruments with
similar characteristics. The Company owned no off-balance
sheet derivative financial instruments at December 31, 1994.
CONSOLIDATED STATISTICAL INFORMATION
The following tables, charts and comments present selected
financial information relating to INTRUST Financial Corporation
in compliance with the statestical disclosure requirements of
the Securities and Exchange Commission for bank holding
companies.
The scope of the Company does not include foreign operations
<TABLE>
AVERAGE BALANCE SHEET (Table 1)
The daily average amounts by condensed categories for the past
three years is presented below (Dollars in thousands):
<CAPTION>
Year Ended December 31 ------1994------ ------1993------- ------1992--------
Average Percent Average Percent Average Percent
Balance of Total Balance of Total Balance of Total
<S> <C> <C> <C> <C> <C> <C>
Assets:
Cash and Due from Banks $ 82,525 5.4% $ 78,681 5.8% $ 60,976 5.3%
Taxable Investment Securities 257,270 16.7 248,620 18.4 235,688 20.3
Nontaxable Investment
Securities 61,427 4.0 73,711 5.5 88,234 7.6
Federal Funds Sold 61,425 4.0 71,498 5.3 64,375 5.5
Securities Purchased under
Agreements to Resell 0 0.0 0 0.0 2,317 0.2
Loans (net of allowance
for loan losses) 993,521 64.5 814,469 60.4 662,806 57.1
Building and Equipment 31,446 2.0 23,219 1.7 19,079 1.6
Other 52,891 3.4 39,247 2.9 27,568 2.4
Total $1,540,505 100.0% $1,349,445 100.0% $1,161,043 100.0%
Liabilities and Stockholders' Equity:
Demand Deposits $ 268,184 17.4% $ 231,985 17.2% $ 166,064 14.3%
Savings and Interest-Bearing
Demand Deposits 542,468 35.2 475,198 35.2 360,815 31.1
Time Deposits 487,759 31.7 441,555 32.7 456,217 39.3
Short-Term Borrowing 63,631 4.1 56,096 4.2 56,421 4.9
Long-Term Debt 36,495 2.4 24,787 1.8 12,784 1.1
Other Liabilities 14,766 1.0 13,878 1.0 13,161 1.1
Stockholders' Equity 127,202 8.2 105,946 7.9 95,581 8.2
Total $1,540,505 100.0% $1,349,445 100.0% $1,161,043 100.0%
</TABLE>
<TABLE>
NET INTEREST-EARNINGS ANALYSIS (Table 2)
The following table presents an analysis of the average yields
on earning assets, average rates paid on interest bearing
liabilities, and the net interest differential for each of the
past three years. Loans on nonaccrual basis and overdrafts are
included in the average loan amounts.
The Net Yield on Interest-Earning Assets is net interest
income divided by average interest-earning assets.
<CAPTION>
Year Ended December 31 ----------1994-------- -----------1993-------- -----------1992-------
Yield Yield Yield
Average Total or Average Total or Average Total or
(Dollars in thousands) Balance Income Rate Balance Income Rate Balance Income Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable Investment
Securities $257,270 $11,639 4.52% $248,620 $13,495 5.43% $235,688 $17,383 7.38%
Nontaxable Invest-
ment Securities* 61,427 4,299 10.52 73,711 5,604 11.44 88,234 6,820 11.39
Total Investment
Securities* 318,697 15,938 5.68 322,331 19,099 6.80 323,922 24,203 8.47
Federal Funds Sold 61,425 2,315 3.77 71,498 2,233 3.12 64,375 2,248 3.49
Securities Puchased
under Agreements
to Resell 0 0 0.00 0 0 0.00 2,317 81 3.50
Net Loans 993,521 92,130 9.27 814,469 77,493 9.51 662,806 69,781 10.53
Total Interest-Earning
Assets* $1,373,643 $110,383 8.19% $1,208,298 $98,825 8.41% $1,053,420 $96,313 9.45%
<CAPTION>
* Yields on tax-exempt securities are shown on a fully taxable
equivalent basis assuming a 35 percent tax rate for 1994 and
1993 and a 34 percent tax rate for 1992.
Year Ended December 31 -----------1994-------- -----------1993-------- -----------1992-------
Yield Yield Yield
Average Total or Average Total or Average Total or
(Dollars in thousands) Balance Income Rate Balance Income Rate Balance Income Rate
<S> <C> <C> <C> <C> <C> <C>
Savings and Interest-
Bearing Demand
Deposits $542,468 $11,828 2.18% $475,198 $11,062 2.33% $360,815 $10,959 3.04%
Other Time Deposits 487,759 21,336 4.37 441,555 19,872 4.50 456,217 24,577 5.39
Total Deposits 1,030,227 33,164 3.22 916,753 30,934 3.37 817,032 35,536 4.35
Short-Term Debt 63,631 2,030 3.19 56,096 1,518 2.71 56,421 1,696 3.01
Long-Term Debt 36,495 3,073 8.42 24,787 1,801 7.27 12,784 1,136 8.89
Total Interest-Bearing
Liabilities $1,130,353 $38,267 3.39% $997,636 $34,253 3.43% $886,237 $38,368 4.33%
Net Differential $243,290 $72,116 $210,662 $64,572 $167,183 $57,945
Net Yield on Interest-
Earning Assets 5.25% 5.34% 5.50%
</TABLE>
<TABLE>
CHANGE IN INTEREST INCOME AND INTEREST EXPENSE (Table 3)
Further insight into year-to-year changes in net interest
income may be gained by segregating the rate and volume
components of the increases in interest income and expense
associated with earning assets and interest-bearing liabilities.
The following table presents this rate/volume analysis
comparing changes in net interest income from 1994 to 1993 and
from 1993 to 1992.
Net interest income increased in 1994 as a result of positive
volume variances . The increase in 1994 due to volume changes is
primarily because of an increase in net loans that exceeded
overall increases in interest-bearing liabilties. Lower yields
on net loans and other earning assets caused a decrease in rate
changes for total interest-earning assets that exceeded lower
rates on all deposits resulting in an unfavorable rate change
for net interest income.
<CAPTION>
----------1994 vs. 1993---------- -----------1993 vs. 1992-----------
---Due to Changes in--- ---Due to Changes in---
Increase Volume/ Increase Volume/
(Dollars in thousands) (Decrease) Volume Rates Rates (Decrease) Volume Rates Rates
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable Investment
Securities $(1,856) $ 470 $(2,247) $ (79) $(3,888) $ 954 $ (4,590) $ (252)
Nontaxable Investment
Securities (1,305) (934) (445) 74 (1,216) (1,122) (112) 18
Total Investment
Securities (3,161) (464) (2,692) (5) (5,104) (168) (4,702) (234)
Federal Funds Sold 82 (314) 460 (64) (15) 249 (238) (26)
Securities Purchased
Under Agreements
to Resell 0 0 0 0 (81) (81) 0 (0)
Net Loans 14,637 17,036 (1,967) (432) 7,712 15,967 (6,718) (1,537)
Total Interest-Earning
Assets $11,558 $16,258 $(4,199) $(501) $ 2,512 $15,967 $(11,658) $(1,797)
Savings and Interest-Bearing
Demand Deposits $ 766 $ 1,566 $ (700) $(100) $ 103 $ 3,475 $ (2,560) $ (812)
Other Time Deposits 1,464 2,079 (557) (58) (4,705) (790) (4,045) 130
Total Deposits 2,230 3,645 (1,257) (158) (4,602) 2,685 (6,605) (682)
Short-Term Debt 512 204 271 37 (178) (10) (169) 1
Long-Term Debt 1,272 852 286 134 665 1,066 (207) (194)
Total Interest-Bearing
Liabilities 4,014 4,701 (700) 13 (4,115) 3,741 (6,981) (875)
Net Interest Income $7,544 $11,557 $(3,499) $(514) $ 6,627 $12,226 $ (4,677) $ (922)
</TABLE>
INVESTMENT PORTFOLIO (Table 4)
The book value of investment securities at December 31 for the
past three years is presented below (Dollars in thousands):
1994 1993 1992
U.S. Treasury Securities $119,215 $139,496 $ 68,208
U.S. Agency Securities 97,172 130,346 163,240
State, County and Municipal Securities 54,973 63,971 81,228
Other Securities 5,419 7,748 7,700
Total $276,779 $341,561 $320,376
Except for total U.S. Treasury and U.S. Agency obligations, no
investment in a single issuer exceeds 10 percent of
stockholders' equity.
<TABLE>
MATURITIES AND YIELD ANALYSIS (Table 5)
The distribution of maturities and weighted average yields of
investment securities at December 31, 1994 is as follows (Dollars in thousands):
<CAPTION>
Total Within 1 Year 1-5 Years 5-10 Years After 10 years Average
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Maturity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
Securities $119,215 4.9% $ 69,414 4.5% $ 49,801 5.5% $ - - $ - - 11.1 mos.
U.S. Agency 2 years,
Securities 97,172 5.4 41,624 4.8 43,450 5.4 10,446 6.8% 1,652 7.4% 3.8 mos.
State, County and
Municipal 3 years,
Securities* 54,973 11.1 7,733 11.3 30,955 11.5 13,481 10.0 2,804 10.5 2.8 mos.
5 years,
Other Securities 5,419 5.9 2,824 7.1 46 10.5 - - 2,549 4.6 2.6 mos.
1 year,
Total $276,779 6.3% $121,595 5.1% $124,252 7.0% $23,927 8.6% $7,005 7.6% 11.0 mos.
*Yields on tax-exempt securities are shown on a fully
taxable equivalent basis assuming a 35 percent tax rate.
</TABLE>
<TABLE>
LOAN PORTFOLIO (Table 6)
A breakdown of outstanding loans, by type, at year-end for the
past five years is as follows (Dollars in thousands):
<CAPTION>
-----1994------- -----1993------ -----1992------ -----1991------ -----1990------
Percent Percent Percent Percent Percent
Amount of Total Amount of Total Amount ofTotal Amount of Total Amount of Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial,
Financial and
Agricultural $ 377,553 35.7% $389,513 39.9% $295,392 39.1% $240,489 35.2% $232,761 35.8%
Real Estate-
Construction 21,415 2.0 17,725 1.8 10,070 1.3 11,839 1.7 22,163 3.4
Real Estate-
Mortgage 185,105 17.5 200,406 20.6 133,250 17.6 124,900 18.3 119,783 18.5
Installment 474,012 44.8 367,257 37.7 317,298 42.0 306,221 44.8 274,778 42.3
Total $1,058,085 100.0% $974,901 100.0% $756,010 100.0% $683,449 100.0% $649,485 100.0%
</TABLE>
<TABLE>
MATURITIES AND SENSITIVITY TO INTEREST RATE CHANGES (Table 7)
The maturity distribution of loans outstanding at December 31,
1994 (excluding Real Estate-Mortgage, and Installment) by type
and sensitivity to interest rate changes is as follows (Dollars
in thousands):
<CAPTION>
-------------Due-------------- Loans Due After One Year
One Year After 1 Year After Within After
or Less thru 5 Years 5 Years 5 Years 5 Years
<S> <C> <C> <C> <C> <C>
Commercial, Financial Fixed Rates $ 36,840 $ 2,824
and Agricultural $244,494 $118,023 $15,036
Real Estate- Floating or
Construction 8,900 4,121 8,394 Adjustable Rate 85,304 20,606
Total $253,394 $122,144 $23,430 Total $122,144 $23,430
Note: Demand loans, past due loans and overdrafts are reported in "One Year or Less."
Loans are renewed only after consideration of the borrower's
creditworthiness at maturity, except for installment loans which
are written on a fully amortized basis. Loans are not written
on the basis of guaranteed renewals. Those loans which are
renewed are generally renewed for similar terms at market
interest rates.
</TABLE>
<TABLE>
RISK ELEMENTS (Table 8)
Loans considered risk elements include those which are accounted
for on a nonaccrual basis, loans which are contractually past
due 90 days or more as to interest or principal payments, and
those renegotiated to provide a reduction of interest or
principal which would not otherwise be considered except in
cases of deterioration in the financial position of the
borrower. The following is a table of nonaccrual, past due and
restructured loans at December 31 for each of the past five
years (Dollars in thousands):
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Loan Categories
Nonaccrual $2,843 $2,756 $3,001 $6,886 $5,776
Past Due 90 days or more 3,074 2,053 1,654 985 2,120
Restructured 336 370 1,589 296 398
Total $6,253 $5,179 $6,244 $8,167 $8,294
</TABLE>
Gross interest income that would have been recorded in 1994
on nonaccrual and restructured loans, if the loans had been
current in accordance with their original terms and had been
outstanding throughout the period or since origination if held
for part of the period, was $279,000. The amount of interest on
those loans that was actually included in income for the period
was $48,000.
Loans are reported as being in nonaccrual status if: (a)
they are maintained on a cash basis because of deterioration in
the financial condition of the borrower, (b) payment in full of
interest or principal is not expected, or (c) principal or
interest has been in default for a period of 90 days or more
unless the obligation is both well secured and in the process of
collection. Any accrued but unpaid interest previously recorded
on such loans is reversed against current period interest
income.
The classification of a loan as nonaccrual or reduced rate
does not necessarily indicate that the ultimate collection of
the loan principal and interest is doubtful. Interest income on
nonaccrual loans is recognized only in the period when realized.
At the same time, however, management recognizes the lower
quality and above normal risk characteristics of these loans
and, therefore, considers the potential risk of principal loss
on loans included in this category in evaluating the adequacy of
the allowance for loan losses.
Management has identified additional problem loans in the
portfolio which are not stated in Table 8. These loans are
reviewed on a continuous basis and they comprise less than 0.7
percent of the loan portfolio. The Company has developed a
credit risk rating system in which a high percentage of loans in
each bank are evaluated by Credit Review staff.
<TABLE>
SUMMARY OF LOAN LOSS EXPERIENCE (Table 9)
The table below presents, in summary form, for the past five
years the year-end and average loans outstanding; the changes in
the allowance for loan losses, with loans charged off and
recoveries on loans previously charged off by loan category; the
ratio of net charge-offs to average loans; and the ratio of the
allowance for losses to year-end loans outstanding (Dollars in thousands):
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Amount of loans at year-end $1,058,085 $974,901 $756,010 $683,449 $649,485
Average loans outstanding $1,013,831 $834,412 $678,398 $646,201 $538,579
Beginning balance of allowance
for loan losses $21,793 $16,099 $13,767 $10,637 $8,892
Allowance of banks acquired 164 3,579 685 0 1,380
Loans charged-off:
Commercial, Financial and Agricultural 845 211 3,241 1,547 3,259
Real Estate-Construction 0 50 50 530 0
Real Estate-Mortgage 248 56 455 897 403
Installment 6,441 5,362 6,290 6,524 4,472
Total loans charged off 7,534 5,679 10,036 9,498 8,134
Recoveries on charge-offs:
Commercial, Financial and Agricultural 1,261 1,031 1,680 434 675
Real Estate-Construction 0 0 0 499 0
Real Estate-Mortgage 134 175 202 204 38
Installment 1,106 992 895 691 515
Total recoveries 2,501 2,198 2,777 1,828 1,228
Net loans charged off 5,033 3,481 7,259 7,670 6,906
Provision charged to expense 2,962 5,596 8,906 10,800 7,271
Ending balance of allowance
for loan losses $19,886 $21,793 $16,099 $13,767 $10,637
Net charge-offs/average loans 0.50% 0.42% 1.07% 1.19% 1.28%
Allowance for loan losses/loans
at year-end 1.88% 2.24% 2.13% 2.01% 1.64%
<CAPTION>
A breakdown of the allowance for loan losses, at the end of the
past five years, is presented below (Dollars in thousands):
Allocation of the Allowance for Loan Losses
Balance at end of period applicable to 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Commercial, Financial and Agricultural $ 6,694 $ 8,638 $ 4,911 $ 4,513 $ 4,778
Real Estate-Construction 339 271 491 53 7
Real Estate-Mortgage 4,104 4,680 2,973 1,704 2,089
Installment 8,749 8,204 7,724 7,497 3,763
Ending balance of allowance
for loan losses $19,886 $21,793 $16,099 $13,767 $10,637
Percent of loans in each category
to total loans 1994 1993 1992 1991 1990
Commercial, Financial and Agricultural 35.7% 39.9% 39.1% 35.2% 35.8%
Real Estate-Construction 2.0 1.8 1.3 1.7 3.4
Real Estate-Mortgage 17.5 20.6 17.6 18.3 18.5
Installment 44.8 37.7 42.0 44.8 42.3
Total 100.0% 100.0% 100.0% 100.0% 100.0%
</TABLE>
The Company's determinations of the level of the allowance
and, correspondingly, the provision for loan losses rests upon
various judgments and assumptions including, but not necessarily
limited to, general economic conditions, loan portfolio
composition and prior loan loss experience. The Company
considers the allowance for loan losses of $19,886,000 adequate
to cover losses inherent in loans outstanding at December 31,
1994. While it is the Company's policy to write off in the
current period those loans or portions of loans on which a loss
is certain or probable, no assurance can be given that the
Company will not in any particular period sustain loan losses
that are sizable in relation to the amount reserved, or that
subsequent evaluations of the loan portfolio, in light of
conditions and factors then prevailing, will not require
significant changes in the allowance for loan losses.
Installment loan charge-offs constitute a significant portion of
total charge-offs. Installment loans include credit cards,
automobile and mobile home loans, residential repair and
modernization loans and other consumer related installment and
revolving credit loans. A substantial portion of the loss has
occurred in the credit card portfolio. Management believes that
its credit card losses are below those experienced by other
credit card issuers as a whole. It is management's opinion that
the loan portfolio is well diversified. There are no
concentrations of loans (in excess of 10 percent of the total
loan portfolio) to multiple borrowers engaged in similar
activities. You are encouraged to refer to the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" section of the report, in which the provision for
loan losses is discussed further. Among the factors considered
in establishing the provision for loan losses are historical
charge-offs, the level and composition of nonperforming loans,
the condition of industries experiencing particular financial
pressures, the review of specific loans involving more than a
normal risk of collectability and evaluation of underlying
collateral for secured lending. Aided by a specialized loan
review process, senior management and the entire lending staff
continually review the entire loan portfolio to identify and
manage loans believed to possess unusually high degrees of risk.
A portion of this review involves the Board of Directors on a
regular basis. Also taken into consideration are classification
judgments of bank regulators and the Company's independent
certified public accountants.
<TABLE>
DEPOSITS (Table 10)
A breakdown of average deposits by type for the past three years is as follows
(Dollars in thousands):
Year Ended December 31 -------1994-------- -------1993-------- -------1992--------
Average Average Average Average Average Average
Balance Rate Paid Balance Rate Paid Balance Rate Paid
<S> <C> <C> <C> <C> <C> <C>
Demand Deposits $ 268,184 - $ 231,985 - $166,064 -
Interest-Bearing Demand 455,410 2.30% 385,153 2.31% 302,758 3.04%
Savings Deposits 87,058 2.17 90,045 2.40 58,057 3.04
Time Deposits 487,759 4.37 441,555 4.50 456,217 5.39
Total $1,298,411 $1,148,738 $983,096
</TABLE>
TIME DEPOSITS (Table 11)
The following table sets forth, by remaining time to maturity,
time deposits in amounts of $100,000 or more at year-end
(Dollars in thousands):
At December 31 1994
Time deposits in amounts of $100,000 or more maturing in:
3 months or less $49,823
Over 3 months through 6 months 16,611
Over 6 months through 12 months 27,391
Over 12 months 24,108
Total $117,933
RETURN ON EQUITY AND ASSETS (Table 12)
The following table presents a three year history of certain
operating ratios:
Year Ended December 31 1994 1993 1992
Return on Average Assets 1.23 1.31 1.51
Return on Average Equity 14.91 16.64 18.32
Dividend Payout Ratio 31.25 20.27 27.36
Average Equity to Average Assets Ratio 8.26 7.85 8.23
SHORT-TERM BORROWINGS (Table 13)
Information for each category of short-term borrowings for which
the average balance outstanding for the period was at least 30
percent of stockholders' equity at the end of the period is
presented below (Dollars in thousands):
Year Ended December 31 1994 1993 1992
Federal Funds Purchased:
Ending Balance $17,685 $27,835 $43,130
Ending Balance Rate 4.67% 2.70% 2.71%
Largest Month-End Balance $64,605 $34,120 $52,445
Average Balance $30,667 $25,401 $36,323
Average Interest Rate 3.53% 2.72% 3.16%
Federal funds purchased transactions are borrowings of
immediately available bank funds, for one business day, at a
specified interest rate.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
INTRUST FINANCIAL CORPORATION
Consolidated Balance Sheets
December 31, 1994 and 1993
(Dollars in thousands)
Assets 1994 1993
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks $ 81,084 $ 74,722
Federal funds sold and securities purchased under
agreements to resell 33,805 71,725
Total cash and cash equivalents 114,889 146,447
Investment securities:
U.S. Government and Federal agencies
(market value, $211,783 for 1994 and $271,200 for 1993) 216,387 269,842
State and political subdivisions
(market value, $56,646 for 1994 and $68,843 for 1993) 54,973 63,971
Other
(market value, $5,401 for 1994 and $7,937 for 1993) 5,419 7,748
Total investment securities 276,779 341,561
Loans 1,058,085 974,901
Less:
Unearned discount 255 299
Allowance for loan losses 19,886 21,793
Net loans 1,037,944 952,809
Land, buildings and equipment 31,994 30,032
Accrued interest receivable 10,372 10,600
Other assets 47,139 42,419
Total assets $1,519,117 $1,523,868
Liabilities and Stockholders' Equity 1994 1993
Liabilities:
Deposits:
Demand $ 268,351 $ 270,457
Savings and interest-bearing demand 494,448 541,071
Time 513,277 471,756
Total deposits 1,276,076 1,283,284
Short-term borrowings:
Federal funds purchased and securities sold under
agreements to repurchase 56,987 64,315
Other 10,806 11,739
Total short-term borrowings 67,793 76,054
Accounts payable and accrued liabilities 12,708 11,421
Notes payable 22,950 25,580
Convertible capital notes 12,000 12,000
Total liabilities 1,391,527 1,408,339
Stockholders' equity:
Common stock, $5 par value; 10,000,000 shares
authorized, 2,400,000 shares issued 12,000 12,000
Capital surplus 12,000 12,000
Retained earnings 105,366 92,312
Treasury stock, at cost (37,780 shares in 1994 and
18,640 shares in 1993) (1,776) (783)
Total stockholders' equity 127,590 115,529
Commitments and contingencies (notes 12 and 15)
Total liabilities and stockholders' equity $1,519,117 $1,523,868
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
INTRUST FINANCIAL CORPORATION
Consolidated Statements of Income
Years Ended December 31, 1994, 1993 and 1992
(Dollars in thousands except per share data)
1994 1993 1992
<S> <C> <C> <C>
Interest income:
Interest on loans $92,130 $77,493 $69,758
Interest on investment securities:
Taxable 11,639 13,495 17,383
Nontaxable 4,299 5,604 6,820
Interest on Federal funds sold and securities
purchased under agreements to resell 2,314 2,233 2,329
Other interest income 1 - 23
Total interest income 110,383 98,825 96,313
Interest expense:
Interest on deposits:
Savings and interest-bearing demand 11,828 11,062 10,959
Time 21,336 19,872 24,577
Interest on Federal funds purchased and
securities sold under agreements to repurchase 2,030 1,272 1,399
Interest on convertible capital notes 1,080 1,080 1,080
Interest on notes payable 1,993 967 353
Total interest expense 38,267 34,253 38,368
Net interest income 72,116 64,572 57,945
Provision for loan losses 2,962 5,596 8,906
Net interest income after provision for
loan losses 69,154 58,976 49,039
Other income:
Service charges on deposit accounts 9,137 8,712 6,566
Trust department fees 5,604 5,241 4,687
Bankcard fees 5,269 3,799 3,747
Securities gains - 60 56
Other service charges, fees and income 6,878 6,412 5,509
Total other income 26,888 24,224 20,565
Other expenses:
Salaries and employee benefits 28,500 26,361 21,121
Net occupancy and equipment expense 7,599 6,727 5,446
Other 30,090 24,332 20,657
Total other expenses 66,189 57,420 47,224
Income before provision for income taxes 29,853 25,780 22,380
Provision for income taxes 10,884 8,154 6,546
Income before cumulative effect of
accounting change 18,969 17,626 15,834
Cumulative effect of accounting change - - 1,679
Net income $18,969 $17,626 17,513
Per share data - assuming no dilution:
Income before cumulative effect of
accounting change $8.00 $7.40 $6.61
Cumulative effect of accounting change - - .70
Net income $8.00 $7.40 $7.31
Per share data - assuming full dilution:
Income before cumulative effect of
accounting change $7.10 $6.59 $5.92
Cumulative effect of accounting change - - .60
Net income $7.10 $6.59 $6.52
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
INTRUST FINANCIAL CORPORATION
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 1994, 1993 and 1992
(Dollars in thousands except per share data)
<CAPTION>
Total
Common Capital Retained Treasury Stockholders'
Stock Surplus Earnings Stock Equity
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1991 $12,000 $12,000 $65,530 $ (60) $ 89,470
Net income ---- ---- 17,513 ---- 17,513
Cash dividends ($2.00 per share) ---- ---- (4,783) ---- (4,783)
Purchase of treasury stock ---- ---- ---- (588) (588)
Sale of treasury ---- ---- ---- 4 4
Balances, December 31, 1992 $12,000 $12,000 $78,260 $ (644) $101,616
Net income ---- ---- 17,626 ---- 17,626
Cash dividends ($1.50 per share) ---- ---- (3,574) ---- (3,574)
Purchase of treasury stock ---- ---- ---- (139) (139)
Balances, December 31, 1993 $12,000 $12,000 $92,312 $ (783) $115,529
Net income ---- ---- 18,969 ---- 18,969
Cash dividends ($2.50 per share) ---- ---- (5,915) ---- (5,915)
Purchase of treasury stock ---- ---- ---- (993) (993)
Balances, December 31, 1994 $12,000 $12,000 $105,366 $(1,776) $127,590
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
INTRUST FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1993, and 1992
(Dollars in thousands)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Cash provided (absorbed) by operating activities:
Net Income $18,969 $ 17,626 $ 17,513
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 2,962 5,596 8,906
Provision for depreciation and amortization 6,228 4,827 3,803
Amortization of premium and accretion of discount
on investment securities 2,179 2,750 616
Changes in assets and liabilities, net of effect
from purchase of acquired entity:
Prepaid expenses and other assets (3,656) 237 (773)
Income taxes 218 (3,043) (2,448)
Interest receivable 560 1,808 2,207
Interest payable 549 (595) (1,083)
Other liabilities 528 650 (548)
Other (76) (191) (197)
Net cash provided by operating activities 28,461 29,665 27,996
Cash provided (absorbed) by investing activities:
Purchase of banks, net of cash and cash
equivalents acquired 3,073 (3,642) 9,505
Purchase of investment securities (36,780) (96,371) (110,920)
Investment securities matured or called 122,787 178,677 130,982
Proceeds from sale of investment securites -- 177 31
Net increase in loans (77,638) (39,966) (49,434)
Purchases of land, buildings and equipment (4,640) (6,065) (3,319)
Proceeds from sales of equipment 102 93 43
Proceeds from sales of other real estate and
repossessions 3,311 3,075 2,337
Other (661) (583) (118)
Net cash provided (absorbed) by investing activities: 9,554 35,395 (20,893)
Cash provided (absorbed) by financing activities:
Net decrease in deposits (51,774) (89,991) (20,874)
Net increase (decrease) in short-term borrowings (8,261) 7,944 (13,011)
Payments on notes payable (2,630) (120) (115)
Proceeds from notes payable -- 25,000 --
Cash dividends (5,915) (3,574) (4,783)
Purchase of treasury stock (993) (139) (584)
Net cash absorbed by financing activities (69,573) (60,880) (39,367)
Increase (decrease) in cash and cash equivalents (31,558) 4,180 (32,264)
Cash and cash equivalents at beginning of year 146,447 142,267 174,531
Cash and cash equivalents at end of year $114,889 $146,447 $142,267
See accompanying notes to consolidated financial statements.
</TABLE>
Notes to Consolidated Financial Statements
December 31, 1994, 1993, and 1992
Dollars in thousands except per share data
1) Summary of Significant Accounting Policies
The accounting and reporting policies of INTRUST Financial
Corporation conform with generally accepted accounting
principles and general practices within the banking industry.
The following is a description of the more significant policies:
a) Principles of Consolidation - The consolidated financial
statements include the accounts of INTRUST Financial Corporation
(Company) and its wholly-owned subsidiaries, INTRUST Bank, N.A.;
INTRUST Bank, El Dorado, N.A.; INTRUST Bank, Haysville, N.A.;
INTRUST Bank, Johnson County, N.A.; INTRUST Bank, Valley Center;
Will Rogers Bank; The First Bank and First Moore Insurance
Agency Inc. (the subsidiaries). Intercompany accounts and
transactions have been eliminated in consolidation.
b) Investment Securities - Investment securities are stated
at cost, adjusted for amortization of premiums and accretion of
discounts, as the Company has the ability and intent to hold the
securities to maturity. Gains and losses on investment
securities are determined based upon the specific identification
of the securities sold.
Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities" became effective for fiscal years beginning after
December 15, 1993. The Statement prescribes the accounting and
reporting for investments in equity securities that have readily
determinable fair values and for all investments in debt
securities. Debt securities that the Company has the positive
intent and ability to hold to maturity are classified as held to
maturity securities and reported at amortized cost. The Company
has no trading securities. Securities not considered held to
maturity securities or trading securities are classified as
available for sale and reported at fair value. Unrealized gains
and losses on these securities are reported as a separate
component of stockholders' equity. The Company
has the positive intent and ability to hold to maturity its
investment securities and has reported its investment securities
at amortized cost in accordance with the provisions of
Statement 115.
c) Loans - Certain loans are made on a discount basis. The
unearned discount applicable to such loans is taken into income
on scheduled payment dates by use of the straight-line method.
Income so recognized does not differ materially from income
which would be recognized under the interest method of
accounting.
Loans are reported as being in nonaccrual status if: (a) they
are maintained on a cash basis because of deterioration in the
financial position of the borrower, (b) payment in full of
interest or principal is not expected, or (c) principal or
interest has been in default for a period of 90 days or more
unless the obligation is both well secured and in the process of
collection. Any accrued but unpaid interest previously recorded
on such loans is reversed against current period interest
income.
Accrual of interest on loans is discontinued when, in
management's judgment, the borrower is unable to meet present
payment terms.
d) Provision for Loan Losses - The provision for loan losses
is the amount required to maintain the allowance for loan losses
at a level adequate to provide for potential loan losses. The
balance in the allowance for loan losses is based on
management's analysis of the loan portfolio, prior bank
experience, economic conditions and such other factors which, in
management's opinion, require consideration. Management
believes that the allowance for loan losses is adequate.
While management uses available information to recognize
losses on loans, future additions to the allowance may be
necessary based on changes in economic conditions. The
subsidiary banks are subject to the regulations of certain
Federal agencies and undergo periodic examinations by those
regulatory authorities. As an integral part of those
examinations, the various regulatory agencies periodically
review the subsidiary banks' allowances for loan losses. Such
agencies may require the subsidiary banks to recognize changes
to the allowances based on their judgments about information
available to them at the time of their examination.
e) Land, Buildings and Equipment - Land is stated at cost,
and buildings and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on the straight-line or
declining balance method depending upon the type of asset and
year of acquisition. The following useful lives have been
established:
Buildings and improvements 15 to 40 years
Furniture, fixtures and equipment 3 to 20 years
f) Goodwill - The excess of cost over fair value of net
assets acquired, which is included in other assets, is amortized
using the straight-line method over 15 years. Core deposit
premiums are amortized using accelerated methods over the
estimated life of the deposit relationship.
g) Income Taxes - The Company and its subsidiaries file a
consolidated Federal income tax return on an accrual basis.
Effective January 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes", and has reported the cumulative effect of that change in
the method of accounting for income taxes in the 1992
consolidated statement of income.
Under Statement 109, deferred tax assets and liabilities are
recognized for the future income tax consequences attributable
to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
h) Net Income Per Share - assuming no dilution is computed
based upon the weighted average number of shares outstanding
(2,371,377 in 1994, 2,381,859 in 1993 and 2,395,694 in 1992).
Net income per share---assuming full dilution is computed based
upon the assumption that the 9% convertible subordinated capital
notes (note 9) had been converted into common stock (400,000
shares) as of the beginning of each respective period presented
with related adjustments to interest and income tax expense.
i) Statements of Cash Flows - For purposes of reporting cash
flows, cash and cash equivalents include cash on hand, amounts
due from banks, Federal funds sold and securities purchased
under agreements to resell. Generally, Federal funds are
purchased and sold for one-day periods and securities purchased
under agreements to resell mature within 90 days. During 1994,
1993 and 1992, the following amounts of cash were paid for
interest and income taxes:
1994 1993 1992
Interest $37,719 $34,848 $39,451
Income taxes 10,666 11,185 7,286
Noncash investing and financing activities included the
following for the years ended December 31, 1994, 1993, and 1992:
1994 1993 1992
Acquistions (note 2):
Assets acquired $42,619 $318,522 $51,111
Liabilities assumed 45,692 314,880 60,616
Assets net of liabilities acquired (3,073) 3,642 (9,505)
Loans transferred to other assets 1,372 1,856 2,280
Sale of other real estate owned financed
by the Company 335 209 325
2) Acquisitions
As of the close of business on November 30, 1994, the Company
purchased First Moore Bancshares, Inc., parent company of The
First Bank, a financial institution located in Moore, Oklahoma
and First Moore Insurance Agency, Inc. a credit life insurance
agency, also located at The First Bank in Moore, Oklahoma.
Terms of the acquisition provided for a purchase price of
$6,399. The acquisition was accounted for by the purchase
method of accounting and, accordingly, the operations of The
First Bank and First Moore Insurance Agency, Inc. have been
included in the accompanying financial statements subsequent to
the date of acquisition. The excess of cost over fair value of
net assets acquired arising from this transaction is amortized
using the straight-line method over a 15-year period. The
effect on results of operations for 1993 and 1992, had the
acquisition occurred at the beginning of these years, is not
material.
On July 9, 1993, INTRUST Bank, N.A. purchased all outstanding
common stock of Kansas State Bank and Trust Company (KSB&T) for
cash consideration of $36 million. KSB&T was immediately merged
with and into INTRUST Bank, N.A. The transaction has been
accounted for as a purchase, and accordingly, the acquired
assets and liabilities have been recorded at their fair value at
acquisition date and the operating results of this acquisition
are included in the Company's consolidated income statement from
the date of acquisition. Excess of cost over fair value of net
assets acquired arising from this transaction is amortized using
the straight-line method over a 15-year period.
Summarized below are the unaudited consolidated results of
operation of the Company and KSB&T on a pro forma basis as
though the merger transaction had been consummated as of the
beginning of 1992. These pro forma results have been prepared
for comparative purposes only and do not purport to be
indicative of the results of operations that would actually have
resulted had the combination been in effect on the dates
indicated or that may result in the future:
(unaudited) 1993 1992
Interest and other income $136,455 $146,496
Income before cumulative effect of
accounting change 18,401 16,829
Net income 18,401 18,508
Net income per common share:
Income before cumulative effect of
accounting change $ 7.73 $ 7.02
Net income 7.73 7.73
On November 18, 1992, the Company purchased WRB Bancshares,
Inc., parent company of Will Rogers Bank, a financial
institution located in Oklahoma City, Oklahoma. Terms of the
acquisition provided for a purchase price of $5,236. The
acquisition was accounted for by the purchase method of
accounting and, accordingly, the operations of Will Rogers Bank
have been included in the accompanying financial statements
subsequent to the date of acquisition. The amount, after
noncurrent assets were reduced to zero, by which net assets
exceeded the purchase price is amortized using the straight-line
method over five years. The effect on results of operations for
1992, had the acquisition occurred at the beginning of the year,
is not material.
3) Investment Securities
The amortized cost and estimated market values of investment
securities are as follows at December 31, 1994:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
U.S. Government and
Federal Agencies $216,387 $ 88 $4,692 $211,783
Obligations of state and
political subdivisions 54,973 1,805 132 56,646
Other 5,419 15 33 5,401
Total $276,779 $1,908 $4,857 $273,830
The amortized cost and estimated market value of investment
securities at December 31, 1994, by contractual maturity, are
shown below. Expected maturities will differ from contractual
maturities because issuers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Estimated
Amortized Market
Cost Value
Due in one year or less $121,595 $120,550
Due after one year through five years 124,252 122,526
Due after five years through ten years 23,927 23,745
Due after ten years 7,005 7,009
Total $276,779 $273,830
The amortized cost and estimated market values of investment
securities are as follows at December 31, 1993:
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
U.S. Government and
Federal Agencies $269,842 $1,679 $321 $271,200
Obligations of state and
political subdivisions 63,971 4,889 17 68,843
Other 7,748 189 --- 7,937
Total $341,561 $6,757 $338 $347,980
Proceeds from sales of investment securities during 1994,
1993, and 1992 were $0, $177, and $31, respectively. No
significant gains or losses were realized on these sales.
Investment securities with a book value of $194,247 and
$166,855 at December 31, 1994 and 1993, respectively, were
pledged as collateral for public and trust deposits and for
other purposes as required by law.
4) Loans
The composition of the loan portfolio at December 31, is as follows:
1994 1993
Commercial, financial and agricultural $ 377,553 $389,513
Real estate-construction 21,415 17,725
Real estate-mortgage 185,105 200,406
Installment, including bankcard 474,012 367,257
Total $1,058,085 $974,901
Certain directors of the Company or related parties of these
directors had loans from the subsidiaries aggregating $27,025
and $26,902 at December 31, 1994 and 1993, respectively. Such
loans were made in the ordinary course of business and on
substantially the same terms as those prevailing at the time for
comparable loans to other borrowers.
Transactions involving loans to directors or related parties
of these directors were as follows:
Loans at December 31, 1993 $26,902
Additions 35,437
Repayments (35,314)
Loans at December 31, 1994 $27,025
Nonaccrual, past due and restructured loans at December 31, are
as follows:
1994 1993
Nonaccrual $2,843 $2,756
Past due 90 days or more 3,074 2,053
Restructured 336 370
Total $6,253 $5,179
Restructured loans include those loans which have been
renegotiated to provide a reduction of interest or principal
which would not otherwise be considered except in cases of
deterioration in the financial position of the borrower.
Gross interest income that would have been recorded in 1994,
1993, and 1992 on nonaccrual and restructured loans if the loans
had been current in accordance with their original terms and had
been outstanding throughout the period or since origination, if
held for part of the period, was $279, $214 and $263,
respectively. The amount of interest on those loans that was
actually included in income for the years ended December 31,
1994, 1993 and 1992 was $48, $80 and $119, respectively.
5) Allowance for Loan Losses
Transactions in the allowance for loan losses were as follows:
1994 1993 1992
Balance at beginning of year $21,793 $16,099 $13,767
Provision charged to expense 2,962 5,596 8,906
Allowance of banks acquired 164 3,579 685
Loans charged off (7,534) (5,679) (10,036)
Recoveries on loans previously
charged off 2,501 2,198 2,777
Balance at end of year $19,886 $21,793 $16,099
6) Land, Buildings and Equipment
A summary of land, buildings and equipment is as follows:
December 31,
1994 1993
Land $ 5,081 $ 4,819
Buildings and improvements 32,425 29,832
Furniture, fixtures and equipment 21,327 18,213
58,833 52,864
Less accumulated depreciation 26,839 22,832
Total $31,994 $30,032
7) Time Deposits
Time certificates of deposit and other time deposits of $100
or more included in total deposit liabilities at December 31,
1994 and 1993 were $117,933 and $98,745, respectively. Interest
expense on this classification of time deposits for the years
ended December 31, 1994, 1993 and 1992 totaled $4,548, $4,007
and $5,658, respectively.
8) Short-Term Borrowings and Notes Payable
All short-term borrowings generally mature in less than 30
days. The maximum amount of these borrowings at any month-end
for the years ended December 31, 1994, 1993 and 1992 was
$75,923, $76,054 and $74,362, respectively. For the years ended
December 31, 1994, 1993 and 1992, the weighted average interest
rate on these borrowings was 3.2%, 2.7% and 3.0%, respectively,
on average balances outstanding of $63,631, $56,096 and $56,421,
respectively.
Notes payable at December 31, 1994 consist of a term loan to
another financial institution with an unpaid principal balance
of $22,500 and industrial revenue bonds with an unpaid principal
balance of $450. The term loan carries a floating rate of
interest (payable quarterly) and is repayable in annual
principal installments of $2,500, with the final payment due in
2003. The Company may, at its option, fix the interest rate and
term. Should the term and interest rate be fixed, the rate on
the indebtedness will be computed based on a premium to the rate
of interest on a U.S. Treasury obligation of a similar term.
The indebtedness is secured by the outstanding common stock of
one of the Company's subsidiaries. At December 31, 1994 the
interest rate on the term loan was 8.00%.
The industrial revenue bonds are payable in annual
installments through October 1997 and are guaranteed by a
subsidiary of the Company.
The Company has a $10,000 line of credit agreement with the
financial institution that has issued the term loan. At
December 31, 1994 there were no outstanding borrowings under
this credit facility.
9) Convertible Capital Notes
The convertible subordinated capital notes (the notes) bear
interest at 9%. The notes are convertible, at the note holder's
option, into the Company's common stock at a conversion price of
$30 per share. The principal amount of the notes matures on
December 22, 1999 and may be redeemed, at the option of the
Company, at any time at a redemption price which declines from
101% in 1994 to 100% in 1995. At maturity, to the extent that
the notes have not been previously retired through redemption or
conversion, the principal amount of the notes will be repaid
either in cash, if the note holder so elects, but only to the
extent the Company has qualified funds (as defined) to do so or
by exchange for the Company's common stock based upon the market
value (as defined) of the Company's common stock at the maturity
date of the notes.
At December 31, 1994, 400,000 shares of the Company's
unissued common stock were reserved for conversion of the
convertible capital notes.
10) Employees' Retirement Plans
One of the subsidiaries has two employee retirement plans
covering substantially all full-time employees who meet
eligibility requirements as to age and tenure. Both plans
provide retirement benefits which are a function of both the
years of service and the highest level of compensation during
any consecutive five-year period during the ten-year period
preceding retirement. The Company's funding policy is to fund
the amount necessary to meet the minimum funding requirements
set forth by ERISA, plus such additional amounts, if any, as the
Company may determine to be appropriate from time to time. Plan
assets are invested primarily in U.S. Government and Federal
agency securities, corporate obligations and listed stocks.
Pension expense for 1994, 1993, and 1992 was $366, $402 and
$218, respectively.
The following table sets forth the plans' funded status and
amounts recognized in the Company's consolidated financial
statements.
December31,
1994 1993
Actuarial present value of benefit obligations:
Accumulated benefit obligation:
Vested $5,181 $5,146
Non-vested 237 359
Total $5,418 $5,505
Projected benefit obligation $7,230 $7,197
Plan assets at fair value (6,953) (7,029)
Plan assets less than projected benefit obligation (277) (168)
Unrecognized net transition asset being amortized
over 15 years (666) (761)
Unrecognized net loss 1,398 1,069
Prepaid pension cost $ 455 $ 140
Pension expense is comprised of the following:
1994 1993 1992
Service cost---benefits earned during the year $524 $477 $464
Interest cost on projected benefit obligation 460 394 335
Return on plan assets (566) (499) (467)
Net amortization and deferral (52) (114) (114)
Net loss from settlement --- 144 ---
Total $366 $402 $218
The weighted average discount rate used was 7.00% in 1994 and
1993, and 7.75% in 1992. The expected long-term rate of return
on plan assets and increase in compensation levels used in
determining the projected benefit obligation were 8.25% and
4.00%, respectively, for each of the past three years.
During 1993, the Company recognized $144 in pension expense
arising from an early retirement program that was offered to
employees that met certain eligibility requirements as to age.
Effective January 1, 1995, the two employee retirement plans
were combined into a single plan. The Company anticipates no
financial impact arising from this action.
The Company has entered into deferred compensation agreements
with certain officers and directors. Under the provisions of
these agreements, the officers and directors will receive
monthly payments for specified periods. The liabilities under
these agreements are being accrued over the officers' remaining
periods of employment or the directors' assumed retirement ages
so that, on the date of their retirement, the then-present value
of the payments will have been accrued. At December 31, 1994
and 1993, $3,487 and $3,299 had been accrued for the liability
under these agreements and is included in accounts payable and
accrued liabilities in the accompanying consolidated balance
sheets. Expense recognized in 1994, 1993 and 1992 was $535,
$510, and $471, respectively, and is included in salaries and
employee benefits in the accompanying consolidated statements on
income.
11) Income Taxes
The provision for income taxes includes the following
components:
1994 1993 1992
Current:
Federal $ 7,685 $8,031 $5,907
State 2,066 1,950 1,613
9,751 9,981 7,520
Deferred:
Federal 988 (1,592) (822)
State 145 (235) (152)
1,133 (1,827) (974)
Total $10,884 $8,154 $6,546
The provision for income taxes noted above produced effective
income tax rates of 36.5%, 31.6% and 29.2% for the years ended
December 31, 1994, 1993 and 1992, respectively. The
reconciliations of these effective income tax rates to the
Federal statutory rates are shown below:
1994 1993 1992
Total income tax as reported 36.5% 31.6% 29.2%
Tax exempt income 4.8 7.3 9.7
Amortization of excess purchase price over
net assets acquired (1.6) (1.1) (.6)
State income tax, net of Federal income
tax benefit (4.8) (4.4) (4.2)
Effect of 1% increase in Federal income
tax rate --- 1.2 ---
Other .1 .4 (.1)
Federal statutory rate 35.0% 35.0% 34.0%
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and liabilities
at December 31, 1994 and 1993 are presented below:
1994 1993
Deferred tax assets:
Allowance for loan losses $6,859 $7,430
Buildings and equipment 2,881 3,047
Other real estate owned 411 877
Deferred compensation 1,329 1,254
Net operating loss carryforwards 2,132 1,080
Investment securities 598 ---
Deposits 2,136 2,204
Other 540 230
Total gross deferred tax assets 16,886 16,122
Less valuation allowances 1,836 1,080
Deferred tax assets, net of valuation allowances 15,050 15,042
Deferred tax liabilities:
Pension (178) (107)
Prepaid deposit insurance (527) ---
Investment securities --- (558)
Core deposit premium (186) (286)
Loans (292) (371)
Other (264) (122)
Total gross deferred tax liabilities (1,447) (1,444)
Net deferred tax assets $13,603 $13,598
As discussed in note 1(g), the Company adopted Statement 109
as of January 1, 1992. The cumulative effect of this change in
accounting for income taxes of $1,679 was determined as of
January 1, 1992 and is reported separately in the consolidated
statement of income for the year ended December 31, 1992.
At December 31, 1994 and 1993, current income taxes payable
of $818 and $1,806, respectively, were included in accounts
payable and accrued liabilities. The net deferred tax assets
noted above were included in other assets.
At December 31, 1994, the Company had net operating loss
deductions available to carryforward of approximately $24,837
for state purposes which expire in varying amounts from 1997
through 2005 and $986 for federal purposes which expire from
2003 through 2009.
The valuation allowance at December 31, 1994, and increase of
$756 for the year then ended, is attributable to net operating
loss carryforwards for state tax purposes.
12) Contingent Liabilities and Cash Restrictions
At December 31, 1994, the subsidiaries were required to have
$15,049 held as reserves with the Federal Reserve Bank.
The Company or its subsidiaries are involved in certain
claims and suits arising in the ordinary course of business. In
the opinion of management, potential liabilities arising from
these claims, if any, would not have a significant effect on the
Company's consolidated financial statements.
13) Stockholders' Equity
Dividend Restriction
The equity in undistributed earnings of the subsidiaries at
December 31, 1994 was $75,458. The Company's ability to pay
dividends on its common stock and interest on its indebtedness
is primarily dependent upon funds provided by dividends from the
subsidiaries. The payment of dividends by the subsidiaries is
restricted only by regulatory authority. At December 31, 1994,
approximately $19,997 was available from the subsidiaries'
retained earnings for distribution as dividends to the Company
in 1995 without regulatory approval.
Stock Option Plan
During 1990, the Company adopted a stock option plan that
provides for the issuance of 120,000 shares of the Company's
common stock. Terms of the plan provide that the exercise price
of the options cannot be less than the fair market value of the
Company's common stock at date of grant and that the maximum
option term cannot exceed ten years.
At December 31, 1994 no options had been granted under the
plan.
14) Business and Credit Concentrations
The Company provides a wide range of banking services to
individual and corporate customers through its Kansas and
Oklahoma subsidiaries. The Company makes a variety of loans
including commercial, agricultural, real estate construction,
real estate mortgage, installment and bankcard loans. The
majority of the loans are made to borrowers located in Kansas,
although some loans are made to out-of-state borrowers. Credit
risk is therefore dependent upon economic conditions in Kansas:
however, loans granted within the Company's trade area have been
granted to a wide variety of borrowers and management does not
believe that any significant concentrations of credit exist with
respect to individual borrowers or groups of borrowers which are
engaged in similar activities that would be similarly affected
by changes in economic or other conditions. Approximately 45%
of the Company's total loan portfolio is comprised of unsecured
bankcard loans and installment loans (a large part of which are
collateralized by automobiles). Consequently, the Company's
credit risk with respect to these loans is dependent upon the
ability of consumers in general to repay their indebtedness.
The Company considers the composition of the loan portfolio in
establishing the allowance for loan losses as described in note 1.
15) Financial Instruments with Off-Balance-Sheet Risk
The Company is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet
the financing needs of its customers. These financial
instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheet. The following summarizes those
financial instruments whose contract amounts represent credit
risk:
Commitments to extend credit $230,190
Commercial and standby letters of credit 29,573
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses. Since many of
the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future
cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of
collateral obtained if deemed necessary by the Company upon
extension of credit is based on management's credit evaluation
of the counter-party.
Standby letters of credit are conditional commitments issued
by the Company to guarantee the performance of a customer to a
third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending
loan facilities to customers.
In December, 1994 the Company securitized and sold $50,000 of
of credit card receivables. Neither the credit card receivables
sold or the securities outstanding are defined as financial
instruments of the Company, but the Company continues to service
the related credit card accounts. The Company no longer
recognizes net interest income and certain fee revenue, nor does
it provide for loan losses on the securitized portfolio.
Instead, servicing fee income is received by the Company.
16) Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments",
requires that the Company disclose estimated fair values for its
financial instruments. The following methods and assumptions
were used to estimate the fair value of each class of financial
instruments;
Cash and Cash Equivalents
The carrying amounts for cash and cash equivalents are
considered reasonable estimates of fair value.
Investment Securities
The fair values of investment securities are based on quoted
market price or dealer quotations, if available. The fair value
of certain state and municipal obligations is not readily
available through market sources. Fair value estimates for
these instruments are based on quoted market prices for similar
instruments, adjusted for differences between the quoted
instruments and the instruments being valued.
Loans
Fair values are estimated for portfolios of loans with
similar characteristics. Loans are segregated by type, and then
further broken down into fixed and adjustable rate components,
and by performing and non-performing categories.
The fair value of loans is estimated by discounting scheduled
cash flows through the estimated maturity using the current
rates at which similar loans could be made to borrowers with
similar credit ratings and for similar maturities.
Accrued Interest Receivable and Accrued Interest Payable
The carrying amount for accrued interest receivable and
accrued interest payable are considered reasonable estimates of
fair value.
Deposit Liabilities
The fair value of demand deposits, saving and
interest-bearing demand deposits is the amount payable on demand
at December 31, 1994 and 1993. The fair value of time deposits
is based on the discounted value of contractual cash flows. The
discount rate is estimated using the rates offered for deposits
of similar remaining maturities as of each valuation date.
Short-Term Borrowings
The carrying amount approximates fair value because of the
short maturity of these instruments.
Notes Payable
Interest rates currently available to the Company for debt
instruments with similar terms and remaining maturities are used
to estimate the fair value of notes payable as of each valuation
date.
Convertible Capital Notes
The fair value of the convertible capital notes is based on
market price quotations obtained from securities dealers.
Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments is estimated using the fees
currently charged to enter into similar agreements, taking into
account the remaining terms of the agreement and the present
creditworthiness of the counterparties. The fair value of
letters of credit is based on fees currently charged to enter
into similar agreements. The fees associated with the
commitments and letters of credit currently outstanding reflect
a reasonable estimate of fair value. For further discussion
concerning financial instruments with off-balance-sheet risk,
refer to note 15.
<TABLE>
The estimated fair values of the Company's financial
instruments are as follows:
<CAPTION>
December 31,1994 December 31, 1993
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks $ 81,084 $ 81,084 $ 74,722 $ 74,722
Federal funds sold and securities purchased
under agreements to resell 33,805 33,805 71,725 71,725
Investment securities 276,779 273,830 341,561 347,980
Loans 1,058,085 1,047,415 974,901 969,790
Less:
Unearned discount 255
Allowance for loan losses 19,886 21,793
Net Loans 1,037,944 1,047,415 952,809 969,790
Accrued interest receivable 10,372 10,372 10,600 10,600
Financial liabilities:
Deposits:
Demand $268,351 $268,351 $270,457 $270,457
Savings and interest-bearing demand 494,448 494,448 541,071 541,071
Time 513,277 510,537 471,756 477,942
Short-term borrowings 67,793 67,793 76,054 76,054
Accrued interest payable 3,556 3,556 2,924 2,924
Notes payable 22,950 22,950 25,580 25,580
Convertible capital notes 12,000 21,600 12,000 19,200
</TABLE>
Limitations
No ready market exists for a significant portion of the
Company's financial instruments. It is necessary to estimate
the fair value of these financial instruments based on a number
of subjective factors, including expected future loss
experience, risk characteristics and economic performance.
Because of the significant amount of judgment involved in the
estimation of the accompanying fair value information, the
amounts disclosed cannot be determined with precision.
17) Supplemental Financial Information
Included in other expenses are the following:
1994 1993 1992
Data processing expense $4,965 $4,233 $3,550
Supplies 2,735 2,515 2,291
Deposit insurance assessment 2,835 2,650 2,236
Postage and dispatch 2,380 2,084 1,717
Advertising and promotional activities 5,430 2,726 1,637
Goodwill 1,437 886 766
18) New Accounting Standards
Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" is effective
for fiscal years beginning after December 15, 1994. This
Statement was amended in October, 1994 by Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures." As
amended, these Statements specify how the allowance for credit
losses related to certain loans should be determined. The
Statements do not apply to large groups of smaller-balance
homogeneous loans that are collectively evaluated for
impairment. In the Company's case, approximately 44% of the
loan portfolio is not subject to the provisions of these
Statements. While there may be certain procedural issues to be
addressed by the Company relative to the recognition and
measurement of impairment so as to comply with the provisions of
these Statements, the relative quality of the loan portfolio and
the loss coverage presently existing in the allowance for loan
losses appear, in the Company's opinion, to indicate that
adoption of Statements 114 and 118 will not have a material
effect on its financial statements.
Statement of Financial Accounting Standards No. 119,
"Disclosures about Derivative Financial Instruments and Fair
Value of Financial Instruments" was effective for fiscal years
ending after December 15, 1994. The Statement prescribes the
disclosure and reporting requirements for off-balance sheet
derivative financial instruments such as futures, forwards,
swaps, option contracts and other financial instruments with
similar characteristics. The Company owned no off-balance
sheet derivative financial instruments at December 31, 1994.
19) Subsequent Events
In January 1995, the Company securitized and sold $50,000 of
credit card receivables, bringing to $100,000 the amount of
credit card receivables securitized and sold.
In February, 1995, the Company elected to consolidate the
banking operations of its five Kansas banking subsidiaries,
INTRUST Bank, N.A.; INTRUST Bank, El Dorado, N.A.; INTRUST Bank,
Haysville, N.A.; INTRUST Bank, Johnson County, N.A.; and INTRUST
Bank, Valley Center into a single entity - INTRUST Bank, N.A.
20) Parent Company Only Financial Statements
INTRUST FINANCIAL CORPORATION
(Parent Company Only)
Balance Sheets
Dollars in thousands except per share data
Assets December 31, 1994 1993
Cash $ 8,113 $ 7,829
Investment securities 811 909
Equipment 1,656 2,108
Investment in subsidiaries 151,846 141,606
Other 1,822 1,570
Total assets $164,248 $154,022
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued liabilities $ 1,402 $ 327
Accrued interest payable 388 320
Current and deferred income taxes 368 846
Notes payable 22,500 25,000
Convertible capital notes payable 12,000 12,000
Total liabilities 36,658 38,493
Stockholders' equity:
Common stock, $5 par value; 10,000,000
shares authorized, 2,400,000 shares issued 12,000 12,000
Capital surplus 12,000 12,000
Retained earnings 105,366 92,312
129,366 116,312
Treasury Stock (1,776) (783)
Total stockholders' equity 127,590 115,529
Total liabilities and stockholders' equity $164,248 $154,022
Dollars in thousands except per share data
INTRUST FINANCIAL CORPORATION
(Parent Company Only)
Statements of Income
Years Ended December 31, 1994 1993 1992
Dividends from subsidiaries $17,450 $9,380 $11,828
Interest income 245 201 141
Fees charged subsidiary banks 1,631 1,513 1,020
Other income --- 42 9
Total income 19,326 11,136 12,998
Operating expenses:
Interest expense 2,688 1,753 1,080
Salaries and employee benefits 1,482 1,493 1,059
Other expense 1,237 871 579
Total operating expenses 5,407 4,117 2,718
Income before income tax benefit, equity
in undistributed net income of subsidiaries
and cumulative effect of accounting change 13,919 7,019 10,280
Income tax benefit 1,187 836 385
Income before equity in undistributed net
income of subsidiaries and cumulative
effect of accounting change 15,106 7,855 10,665
Equity in undistributed net income of subsidiaries:
Income before cumulative effect of
accounting change 3,863 9,771 5,169
Cumulative effect of change in
accounting for income taxes --- --- 1,259
3,863 9,771 6,428
Cumulative effect of change in
accounting for income taxes --- --- 420
Net income $18,969 $17,626 $17,513
Note: Parent Company Only Statements of Stockholders' Equity are
the same as the Consolidated Statements of Stockholders' Equity.
Dollars in thousands except per share data
INTRUST FINANCIAL CORPORATION
(Parent Company Only)
Statements of Cash Flows
Years Ended December 31, 1994 1993 1992
Cash flows provided (absorbed)
by operating activities:
Net income $18,969 $17,626 $17,513
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in undistributed net income
of subsidiaries (3,863) (9,771) (6,428)
Depreciation 472 276 107
Accretion of discount on
investment securities (64) (75) (86)
Gain on sale of equipment --- --- (7)
Gain on sale of investment
securities --- (42) (9)
Increase in other assets (252) (407) (434)
Increase (decrease) in accounts
payable and accrued liabilities 1,143 484 (3)
Decrease in current and deferred
income taxes (478) (274) (588)
Net cash provided by operating
activities 15,927 7,817 10,065
Cash flows provided (absorbed):
by investing activities:
Capital expenditures (25) (1,976) (70)
Proceeds from sale of equipment 7 5 17
Investment securities matured or
called 160 164 ---
Proceeds from sale of investment
securities --- 177 31
Investment in subsidiaries (6,377) (20,025) (6,012)
Net cash absorbed by investing
activities (6,235) (21,655) (6,034)
Cash flows provided (absorbed):
by financing activities:
Proceeds from notes payable --- 25,000 ---
Payments on notes payable (2,500) --- ---
Dividends paid (5,915) (3,574) (4,783)
Purchase of treasury stock, net (993) (139) (584)
Net cash provided (absorbed) by
financing activities (9,408) 21,287 (5,367)
Net increase (decrease) in cash 284 7,449 (1,336)
Cash at beginning of year 7,829 380 1,716
Cash at end of year $ 8,113 $ 7,829 $ 380
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To INTRUST Financial Corporation:
We have audited the accompanying consolidated balance sheet of
INTRUST Financial Corporation and subsidiaries as of December
31, 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of INTRUST Financial Corporation and subsidiaries as of December
31, 1994, and the results of their operations and their cash
flows for the year then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
February 2, 1995
INDEPENDENT AUDITORS' REPORT
The Board of Directors
INTRUST Financial Corporation:
We have audited the accompanying consolidated balance sheet of INTRUST
Financial Corporation and subsidiaries as of December 31, 1993, and the
related consolidated statements of income, stockholders' equity, and
cash flows for each of the years in the two-year period ended December
31, 1993. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
INTRUST Financial Corporation and subsidiaries as of December 31, 1993,
and the results of their operations and their cash flows for each of the
years in the two-year period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in note 11 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes", in 1992.
KPMG Peat Marwick LLP
Wichita, Kansas
February 4, 1994
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
This item is not applicable to the Company.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below are the names of the directors, nominees for
director, executive officers as designated by the Board of
Directors, and nominees for executive officer of the Company,
together with certain related information. All of the executive
officers of the Company will hold office until the next annual
meeting of directors. The directors of the Company are divided
into three classes; the terms of office of the first class,
second class and third class expire at the 1996, 1997 and 1995
annual meetings of stockholders, respectively. Directors will
be elected for a full three year term to succeed those whose
terms expire. The year in which each director's term expires is
indicated after his name and age. Directors and executive
officers will serve as indicated or until their successors are
duly elected and qualified, unless sooner terminated by death,
resignation, removal or otherwise. There are no arrangements or
understandings between any of the directors, executive officers
or any other persons pursuant to which any of the directors or
executive officers have been selected to their respective
positions.
C. ROBERT BUFORD, 61, 1997, has been a director of the Company
since 1982. During the past five years, he has been President
and owner of Zenith Drilling Corporation, an oil and gas
drilling and exploration firm, managing partner of Grand Bluffs
Development Co., a real estate development firm, and a director
of Barrett Resources Corporation, an oil and gas production and
operation firm. In 1992, Mr. Buford became a director of Lone
Star Steakhouse & Saloon, Inc.
WILLIAM D. BUNTEN, 63, 1996, has been a director and Vice
Chairman of the Company since 1982. Mr. Bunten has been
President of IB since December 1982 and has been employed by IB
since 1982.
FRANK L. CARNEY, 56, 1995, has been a director of the Company
since 1982. Since 1979 he has been self-employed in a private
investment company, Carney Enterprises. On September 27, 1991,
the District Court of Sedgwick County, Kansas appointed a
receiver to take possession of an office building owned by Mr.
Carney. The case was settled and dismissed in November 1991.
From November 1988 to December 1993, Mr. Carney was Chairman of
Western Sizzlin, Inc. a food service franchise. On October 27,
1992, Western Sizzlin, Inc. and its related entities filed
Petitions under Chapter 11 of the United States Bankruptcy Code
and subsequently emerged from bankruptcy on December 13, 1993.
From January 1994 to December 1994, Mr. Carney was vice-chairman
of Turbochef, Inc.. Currently, Mr. Carney's principal position
is with Houston Pizza Venture L.L.C., as President.
RICHARD G. CHANCE, 47, 1996, has been a director of the
Company since 1990. During the past five years, he has been
President and Chief Executive Officer of Chance Industries,
Inc., producer of amusement rides and manufacturer of transit
coaches, trams, and replica trolleys.
CHARLES Q. CHANDLER, 68, 1995, has been an officer and
director of the Company since 1971. He is Chairman of the Board
and Chief Executive Officer of the Company and of IB. Mr.
Chandler has been employed by IB since 1950. In 1992, he became
a director of Western Resources, Inc., a Kansas utility company.
Mr. Chandler is the father of Charles Q. Chandler IV and the
nephew of George T. Chandler.
CHARLES Q. CHANDLER IV, 41, 1997, has been a director of the
Company since 1985. Since April 1990, he has been President of
the Company. From January 1988 through March 1990, he was
Executive Vice President of the Company. He was Executive Vice
President of IB from January 1988 until July 1993 when he was
elected Vice Chairman. Mr. Chandler is the son of Charles Q.
Chandler.
GEORGE T. CHANDLER, 73, 1997, has been a director of the
Company since 1982. During the past five years, Mr. Chandler
has been Chairman of the Board of First National Bank, Pratt,
Kansas. Mr. Chandler is an uncle of Charles Q. Chandler.
JAMIE B. COULTER, 54, 1995, has been a director of the Company
since 1983. During the past five years, he has been Chairman of
the Board, Chief Executive Officer and President of Coulter
Enterprises, Inc., managing various businesses and personal
investments in restaurant management, oil and gas exploration
and real estate. Mr. Coulter owns and operates numerous Pizza
Hut restaurants. In 1992, Mr. Coulter became the Chairman,
Chief Executive Officer and President of Lone Star Steakhouse &
Saloon, Inc.
ROBERT L. DARMON, 70, 1997, has been a director of the Company
since 1982. He was President of the Company from 1982 until
April 1990, and Vice Chairman of the Board of IB until his
retirement January 31, 1990. He had been employed by IB since
1970.
CHARLES W. DIEKER, 59, 1995, has been a director of the
Company since 1982. Mr. Dieker had been Executive Vice
President-Marketing of Beech Aircraft Corporation from 1985
until his retirement January 1, 1992.
W.J. EASTON Jr., 69, 1995, has been a director of the Company
since 1982. During the past five years, Mr. Easton has been
President, Chairman of the Board, and Chief Operating Officer of
The Easton Manufacturing Co. Inc., which manufactures auto
parts, and Ferroloy Foundry, Inc.
MARTIN K. EBY Jr., 60, 1997, has been a director of the
Company since 1982. During the past five years, Mr. Eby has
been President and Chairman of the Board of Eby Corporation,
which is the parent company of Martin K. Eby Construction Co.
Inc. He is Chairman of the Company's Audit Committee. In 1992,
Mr. Eby became a director of Southwestern Bell Corporation.
ERIC T. KNORR, 52, 1996, has been a director of the Company
since 1990. During the past five years, he has been Chairman of
the Board and Chief Executive Officer of Dulaney, Johnston &
Priest, general insurance (property and casualty) independent
agents.
J.V. LENTELL, 56, 1997, has been a director of the Company
since April 1994. Mr. Lentell has been Vice Chairman and
Executive Vice President of IB since July 1993. He was Chairman
and Chief Executive Officer of Kansas State Bank and Trust from
1981 to July 1993.
CHARLES G. KOCH, 59, 1995, has been a director of the Company
since 1982. For the past five years, Mr. Koch has been Chairman
of the Board and Chief Executive Officer of Koch Industries
Inc., an integrated oil company.
PAUL A. SEYMOUR Jr., 71, 1996, has been a director of the
Company since 1982. For the past five years Mr. Seymour has
been President of Arrowhead Petroleum Inc. Petitions under
Chapter 11 of the United States Bankruptcy Code were filed in
December 1990 in the United States Bankruptcy Court for the
District of Kansas by Paul A. Seymour, Jr., an individual, and
by Arrowhead Petroleum, Inc., a corporation.
DONALD C. SLAWSON, 61, 1996, has been a director of the
Company since 1982. During the past five years, Mr. Slawson has
been the Chairman of the Board and President of Slawson
Companies, Inc., a group of companies involved in the
acquisition of oil and gas properties, exploration and
production of oil and gas, purchasing and reselling of crude oil
and natural gas, and real estate activities.
JOHN T. STEWART III, 59, 1997, has been a director of the
Company since 1982. During the past five years, Mr. Stewart has
been President and Chief Executive Officer of GEC Precision
Corp., formerly known as Plessey Aero Precision Corp., a
manufacturer of aircraft parts and assemblies; Chairman of the
Board and Director of First National Bank, Medford, Oklahoma,
and Caldwell State Bank, Caldwell, Kansas; and Chairman, Chief
Executive Officer, and Director of First National Bank,
Wellington, Kansas. Prior to January 1990, he was Vice Chairman
of First National Bank, Wellington, Kansas.
PATRICK H. THIESSEN, 67, 1997, has been a director of the
Company since 1982. Mr. Thiessen was Southwestern Regional
Manager of Cargill Inc., Flour Milling Division, a grain
merchandising and processing company, for 11 years until his
retirement in 1993.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table is a summary of certain information
concerning the compensation awarded or paid to, or earned by,
the Company's chief executive officer and each of the Company's
other three executive officers during each of the last three
fiscal years.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
(a) (b) (c) (d) (e) (f)
Other
Name Annual All Other
and Compen- Compen-
Principal sation sation
Position Year Salary($) Bonus($) ($) (1) ($) (2)
C.Q. Chandler 1994 $300,000 $135,000 $22,360 $47,516
COB & CEO of the Company 1993 295,833 118,992 22,360 42,824
and IB 1992 270,833 121,000 22,360 38,942
W.D. Bunten 1994 $249,132 $ 87,500 $ 0 $38,421
Vice Chairman of the 1993 241,666 74,370 0 31,379
Company 1992 195,833 66,000 0 25,543
President of IB
C.Q. Chandler IV 1994 $214,829 $ 75,250 $ 490 $6,098
President of the Company, 1993 206,929 63,958 1,030 5,702
Vice Chairman of IB 1992 155,833 52,800 1,800 5,206
J.V. Lentell 1994 $215,000 $ 75,250 $ 0 $3,442
Vice Chairman and 1993 107,500 0 0 0
Executive Vice President
of IB
J.V. Lentell became an employee and executive officer of IB in
July of 1993; the table reflects compensation paid to Mr.
Lentell subsequent to such time. There were no other
individuals who were considered executive officers of the
Company during 1994.
(1) The amounts shown represent the above-market amounts paid on
distributions from the 1983, 1984, 1986, or 1990 Executive
Deferred Compensation Plans during each of the last three fiscal
years. Does not include perquisites which certain of the
executive officers received, the aggregate amount of which did
not exceed the lessor of $50,000 or 10% of any such officer's
salary and bonus.
(2) The amounts shown for "All other Compensation" include the
following for the current year:
C.Q. W.D. C.Q. J.V.
Chandler Bunten Chandler IV Lentell
Above-market amounts earned
on deferred compensation plans $47,016 $37,921 $6,098 $ 0
Company contributions to
401(k) plan 500 500 0 3442
Total $47,516 $38,421 $6,098 $3,442
STOCK OPTION PLAN
The Company has adopted the First Bancorp of Kansas 1990 Stock
Option Plan (the "Plan"). No options have been granted under
the Plan.
DEFINED BENEFIT PLANS
The Company and IB have adopted a defined benefit retirement
plan for all of their employees (except former KSBT employees;
see information related to second defined benefit plan below).
Employees become participants in the plan on the next January
first or July first following the satisfaction of the following
requirements: (i) twelve consecutive months of employment in
which the employee worked 1,000 or more hours, and (ii)
attainment of age 21, provided that the employee was less than
60 years of age on the date of his employment. Although
benefits under the plan are payable in a variety of ways, the
normal form of benefit payment provides monthly payments to an
employee for fifteen years. An employee's Normal Retirement
Benefit (as defined in the plan) is a monthly benefit equal to
1.35% of such employee's Final Average Monthly Compensation (as
defined in the plan), plus .45% of his Final Average Monthly
Compensation in excess of his Social Security Covered
Compensation (as defined in the plan), and multiplied by such
employee's number of completed years of Benefit Service (as
defined in the plan) not to exceed 30 years. Final Average
Monthly Compensation is equal to the average of an employee's
monthly cash compensation (exclusive of bonuses) during the
five-year period prior to such employee's Normal or Early
Retirement, or termination of employment prior to Normal
Retirement Date (as defined in the plan).
As an addition to the defined benefit retirement plan, IB
maintains a supplemental retirement plan which is an unfunded
excess benefit plan. The purpose of this plan is to provide
retirement benefits to its employees that cannot be provided
through its defined benefit retirement plan due to the benefit
limits imposed by Internal Revenue Code Section 415. Code
Section 415 places a limit on the amount of annual benefits
which can be provided to individual employee participants in the
defined benefit retirement plan.
The following table illustrates combined estimated annual
benefits payable upon retirement or upon written election of the
participant if the participant continues to work after his
Normal Retirement Date, under the Company's and IB's defined
benefit retirement and IB's supplemental retirement plans, to
persons in the specified remuneration and years of service
classifications. Because the covered remuneration equals cash
compensation, excluding bonuses, the remuneration categories
below reflect the base salary amounts in the summary
compensation table. The amounts presented are straight life
annuity amounts and are not subject to any deduction for social
security or other offset amounts. The following amounts are
overstated to the extent that social security covered
compensation for an individual may exceed $15,000.
PENSION PLAN TABLE
REMUNERATION YEARS OF CREDITED SERVICE
15 20 25 30 35
$200,000 $53,268 $71,023 $88,779 $106,535 $106,535
250,000 67,002 89,336 111,670 134,004 134,004
300,000 80,736 107,648 134,560 161,472 161,472
350,000 94,470 125,960 157,451 188,941 188,941
IB assumed a second defined benefit pension plan as a result
of the acquisition and merger of KSBT into IB. This plan covers
substantially all of the former KSBT employees (including
executive officer J.V. Lentell). Benefits under the plan are
based on years of service and the employee's average
compensation for five of the last ten years of employment. The
following table illustrates the estimated annual benefits
payable upon retirement under the former KSBT pension plan to
persons in the specified remuneration and years of service
classifications:
PENSION PLAN TABLE
REMUNERATION YEARS OF CREDITED SERVICE
35 40
$200,000 $155,292 $171,771
250,000 196,627 217,226
The following table sets forth the covered compensation and
years of credited service for pension plan purposes for each of
the executive officers listed in the summary compensation table
as of December 31, 1994, as well as the number of years of
credited service which will have been completed by each of said
persons if they retire from IB at the age of 65.
TOTAL
COVERED COMPLETED YEARS YEARS OF CREDITED
COMPENSATION OF CREDITED SERVICE SERVICE AT NORMAL
NAME AS OF 12/31/94 AS OF 12/31/94 RETIREMENT AGE(65)
C.Q. Chandler(1) $300,000 44.750 41.500
W.D. Bunten 249,132 12.083 13.750
C.Q. Chandler IV 214,829 19.000 42.500
J.V. Lentell 215,000 28.833 37.417
(1) Per Amendment Number Two to the Employees' Retirement Plan
(see Exhibit 10(f)), C.Q. Chandler elected in writing to
commence receipt of his normal retirement benefit in the form of
a lump sum payment. This payment was received by C.Q. Chandler
in December 1992.
Effective January 1, 1995, the two defined benefit plans were
combined into a single plan with substantially the same terms
and benefits.
COMPENSATION OF DIRECTORS
The directors of the Company receive no remuneration for
serving in that capacity. However, the directors of the Company
are also directors of IB, and in that capacity receive fees of
$1,000 per quarter and $500 for each board meeting attended.
Advisory directors receive a quarterly fee of $750. In
addition, directors who are not full-time bank employees of IB
receive $150 for each Discount Committee meeting attended, $200
for each Audit Committee meeting attended and for attendance by
the chairman at the Trust Department Examining Committee, and
$100 for all other committee meetings attended.
In 1983, 1984, and 1986, the Board of Directors of IB adopted
unfunded Outside Directors' Deferred Compensation Plans which
were open to directors of IB who are not full-time bank
employees and who chose to participate. Under these plans, a
participating director had the option to defer up to 100 percent
of his quarterly fee. Benefit payment amounts relate to the fee
deferred and accrual of interest at an above market rate. At
retirement (age 70), benefits will be paid on a monthly basis
for 120 months, with any installments not paid prior to a
participant's death being paid to his designated beneficiary.
If a director ceases to serve as such prior to attaining age 70,
the participating director will receive reduced benefit payments
related to the fees deferred and the duration of his
participation.
The Board of Directors of the Company adopted an unfunded
Outside Directors' Deferred Compensation Plan in 1990 which was
open to directors of the Company who were not full-time Company
or IB employees and who chose to participate. Under the plan, a
participating director had the option to defer 100 percent of
his 1990 quarterly fee paid by IB. Benefit payments and other
terms of the plan are the same as the IB plans described in the
previous paragraph.
CHANGE-IN-CONTROL ARRANGEMENTS
Under unfunded Executive Deferred Compensation Plans
established in 1983, 1984, and 1986 by IB and in 1990 by the
Company, in which C.Q. Chandler III, W.D. Bunten, and C.Q.
Chandler IV are participants, if the employee's employment with
the Company terminates for any reason other than death or
voluntary separation of employment after the date on which a
Change in Control (as described below) occurs, then the Company
shall pay to the employee within 60 days after such termination,
a single lump sum in lieu of any other subsequent payments under
the Plan. The lump sum payment shall be equal to the sum of all
amounts that the employee would have received if the employee
had retired on the employee's 65th birthday. Such payment shall
include all unpaid Interim Distributions, if any, and all
Retirement Payments. The entire lump sum payment shall be
discounted by a one-time charge of 8%.
If the employee dies after termination of employment but
before payment of any amount under this paragraph, then such
amount shall be paid to the beneficiary or beneficiaries named
as soon as practical after the employee's death.
A Change in Control of the Company shall be deemed to have
occurred if: 1) any person, partnership, corporation, trust, or
similar entity or group shall acquire or control more than 20%,
after October 16, 1991, of the voting securities of the Company
in a transaction or series of transactions; or 2) at any time
during any two-year period a majority of the Board of Directors
of the Company is not comprised of individuals who were members
of such Board of Directors at the commencement of such two-year
period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's compensation committee
are John T. Stewart III, Donald C. Slawson, and Robert L.
Darmon. Mr. Darmon was President of the Company from 1982 until
April 1990. Mr. Stewart and Mr. Slawson have never served as an
officer or employee of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information as of February 6,
1995 relating to the beneficial ownership of the Company's
common stock and capital notes by each person known by the
Company to own beneficially more than five percent of the
outstanding shares of the Company's common stock, by each
director, by each nominee for director, by each executive
officer and by all directors and executive officers of the
Company as a group. The information as to beneficial ownership
of the Company's common stock was supplied by the individuals
involved. For purposes of this table, beneficial ownership is
as defined in the rules and regulations of the Securities and
Exchange Commission. Unless otherwise indicated, the individual
possesses sole voting and investment power as to the shares
shown as being beneficially owned:
<TABLE>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
SHARES
ISSUABLE FACE
UPON CON- AMOUNT
OWNED AT VERSION OF OF
FEBRUARY 6 CAPITAL CAPITAL
NAME ADDRESS 1995(2) NOTES(3) NOTES
<S> <C> <C> <C>
C. Robert Buford Fourth Financial 2,053 293 $ 8,800
Center, Suite 505
Wichita, KS 67202
William D. Bunten Box One 5,162 2,022 $ 60,700
Wichita, KS 67201
Frank L. Carney 2611 Wilderness Court, 1,132 732 $ 22,000
Wichita, KS 67226
Richard G. Chance 165 North Muirfield 180 -- $ --
Wichita, KS 67212
Charles Q. Chandler Box One 66,808(4) 16,736(4) $ 502,100
Wichita, KS 67201
Charles Q. Chandler IV Box One 38,061(5) 20,766(5) $ 623,000
Wichita, KS 67201
Anderson W. Chandler 4718 West Hills Dr. 348,286(6) 47,946(6) $1,438,400
Topeka, KS 66606
David T. Chandler c/o First National 338,377(6) 48,337(6) $1,450,200
Bank
Pratt, KS 67124
George T. Chandler c/o First National 296,559(6) 28,739(6) $ 862,200
Bank
Pratt, KS 67124
Jamie B. Coulter P.O. Box 12248 350 50 $ 1,500
Wichita, KS 67202
Robert L. Darmon Box One 5,880(7) 1,140(7) $ 34,200
Wichita, KS 67201
Charles W. Dieker 632 Birkdale Dr. 2,866 366 $ 11,000
Wichita, KS 67230
W. J. Easton, Jr. P.O. Box 889 1,919 559 $ 16,800
Wichita, KS 67201
Martin K. Eby, Jr. P.O. Box 1679 6,332 2,332 $ 70,000
Wichita, KS 67201
Warren B. Gillespie 8201 E. Harry, 120,000 -- $ --
Unit 303
Wichita, KS 67202
Eric T. Knorr P.O. Box 206 19,250(8) 1,879(8) $ 56,400
Wichita, KS 67201
Charles G. Koch P.O. Box 2256 92,838 8,566 $ 257,000
Wichita, KS 67201
J. V. Lentell 14 Hampton Rd. 125 -- $ --
Wichita, KS 67207
Paul A. Seymour, Jr. Box 8287 Munger 254,582(9) 39,222(9) $1,176,800
Station
Wichita, KS 67208
Donald C. Slawson 104 South Broadway, 2,686(10) -- $ --
Suite 200
Wichita, KS 67202
John T. Stewart III Box 2 144,826 24,106 $ 723,200
Wellington, KS 67152
Patrick H. Thiessen 115 South Rutan 6,279(11) 2,319(11) $ 69,600
Wichita, KS 67218
Polly G. Townsend Five Live Oak 120,000 -- $ --
Fernandina Beach,
FL 32034
Directors and Executive
Officers as a Group (19 persons) 947,888(12) 149,827(12) $4,495,300
</TABLE>
(1) Including and excluding shares issuable upon conversion of
the Convertible Capital Notes ("capital notes"), the
officers, executive officers, and directors who beneficially
owned more than 1.0% of the outstanding shares and other
persons who beneficially owned more than 5.0% of the
outstanding shares were:
Percentage Ownership of Common Stock
Including Shares Excluding Shares Percentage
Issuable Upon Issuable Upon Ownership
Conversion of Conversion of of Capital
Incividual Capital Notes Capital Notes Notes
Charles Q. Chandler III 2.82% 2.13% 4.18%
Charles Q. Chandler IV 1.61% 0.74% 5.19%
Anderson W. Chandler* 14.54% 12.79% 11.99%
David T. Chandler* 14.12% 12.35% 15.43%
George T. Chandler* 12.48% 11.41% 7.19%
Warren B. Gillespie 5.11% 5.11% --
Charles G. Koch 3.94% 3.59% 2.14%
Paul A. Seymour, Jr. 10.66% 9.17% 9.81%
John T. Stewart III 6.10% 5.14% 6.03%
Polly G. Townsend 5.11% 5.11% --
*Includes shares directly owned and shares controlled as
co-trustees. See (6).
The Directors and Executive Officers as a group beneficially
owned 37.95% of the Company's common stock including
shares issuable upon conversion of the capital notes,
33.99% of the common stock excluding shares issuable
upon conversion of the capital notes, and 37.46% of
the capital notes.
(2) Includes shares issuable upon conversion of the capital
notes.
(3) Shares issuable upon conversion in accordance with the
terms of the Convertible Capital Notes issued December
22, 1987. The capital notes are convertible into
common stock, at any time prior to the close of
business on the fifteenth day prior to maturity on
December 22, 1999, at a conversion price of $30.00 per
share, subject to adjustment in certain circumstances.
(4) Does not include 400 shares of common stock and $2,000 of
capital notes, convertible into 66 shares of common stock,
owned by Georgia J. Chandler (wife), 348,180 shares of common
stock and $1,264,000 of capital notes, convertible into
42,132 shares of common stock, beneficially owned by George
T. Chandler (uncle), and 17,215 shares of common stock and
$623,000 of capital notes, convertible into 20,766 shares of
common stock, beneficially owned by Charles Q. Chandler IV (son).
(5) Does not include 75 shares of common stock owned by Marla J.
Chandler (wife).
(6) Anderson, David and George Chandlers' beneficial ownership is
comprised of the following:
(a) Shares beneficially owned by all three over which they
share voting and investment power:
(1) 80,360 shares of common stock and $401,800 of capital notes
(13,393 shares) held as co-trustees for the Elizabeth Clogston Trust.
(2) 61,160 shares of common stock and $305,800 of capital notes
(10,193 shares) held as co-trustees for the Grace Gannon Trust.
(3) 110,120 shares of common stock and $550,600 of capital notes
(18,353 shares) held as co-trustees for the Olive C. Clift Trust.
(b) Shares beneficially owned by David and George over which
they share voting and investment power:
(1) 95,380 shares of common stock held as co-trustees for
the George T. Chandler Trust #1.
(2) 1,160 shares of common stock and $5,800 of capital notes
(193 shares) held as co-trustees for the Barbara A. Chandler Trust #1.
(c) Shares beneficially owned by David Chandler who has sole
voting and investment power:
(1) 4,545 shares of common stock and $141,900 of capital notes
(4,730 shares) held in the George T. Chandler Trust #2 for
benefit of David T. Chandler.
(2) 4,545 shares of common stock and $142,000 of capital notes
(4,733 shares) held in the George T. Chandler Trust #2 for
benefit of George T. Chandler, Jr.
(3) 4,545 shares of common stock and $141,900 of capital notes
(4,730 shares) held in the George T. Chandler Trust #2 for
benefit of Paul T. Chandler.
(4) 4,545 shares of common stock and $142,000 of capital notes
(4,733 shares) held in the George T. Chandler Trust #2 for
benefit of Barbara Ann Chandler.
(d) 128,660 shares of common stock and $582,000 of capital notes
(19,400 shares) held in Anderson Chandler's name over which he
has sole voting and investment power.
(e) 3,040 shares of common stock and $15,200 of capital notes
(506 shares) held in David Chandler's name over which he has
sole voting and investment power.
(f) 1,000 shares of common stock and $5,000 of capital notes
(166 shares) held by Michele M. Chandler (wife of David Chandler)
over which David Chandler has shared voting and investment power.
(7) Mr. Darmon's beneficial ownership is comprised of 45 shares of
common stock and $34,200 of capital notes (1,139 shares) held in
his name over which he has sole voting and investment power and
4,695 shares held in a trust with his wife, Beatrice F. Darmon,
with whom he shares voting and investment power.
(8) Mr. Knorr's beneficial ownership is comprised of: (a) 7,511
shares of common stock and $29,200 of capital notes (973 shares)
held in his name; (b) 520 shares of common stock held by him in
an Individual Retirement Account; (c) 3,800 shares of common stock
held in a trust with his wife, Darlene R. Knorr over which he
has sole voting and investment power; (d) 5,440 shares of common
stock and $27,200 of capital notes (906 shares) held jointly with
his wife over which he has shared voting and investment power;
and (e) 100 shares of common stock held by Eric T. Knorr, Custodian
for Elizabeth T. Knorr under UGTMA over which he has sole voting and
investment power. Does not include 200 shares of common stock,
owned by Darlene R. Knorr, in which Mr. Knorr disclaims beneficial
ownership.
(9) Mr. Seymour's beneficial ownership is comprised of the following:
(a) 200 shares of common stock and $1,000 of capital notes (33 shares)
held in his name over which he has sole voting and investment power;
(b) 87,940 shares of common stock and $439,700 of capital notes
(14,656 shares) held by Dorothea W. Seymour and Paul A. Seymour Jr.,
Co-trustees of Dorothea W. Seymour Trust U/A dated November 15, 1972,
over which he shares voting and investment power with Dorothea W.
Seymour; (c) 26,800 shares of common stock and $39,000 of capital
notes (1,300 shares) held by John Wofford Seymour and $120,000 of
capital notes (4,000 shares) held in the John Wofford Seymour family
trust over which he shares voting and investment power with
Dorothea W. Seymour; (d) 19,595 shares of common stock and $125,600
of capital notes (4,186 shares) held by Paul A. Seymour III over which
he shares voting and investment power with Dorothea W. Seymour;
(e) 26,160 shares of common stock and $155,800 of capital notes
(5,193 shares) held by William Todd Seymour over which he shares
voting and investment power with Dorothea W. Seymour; (f) 1,300
shares of common stock and $6,500 of capital notes (216 shares) held
by Paul A. Seymour Jr. and D.W. Seymour, Co-trustees of Paul A.
Seymour Trust U/A dated November 15, 1972, over which he shares
voting and investment power with Dorothea W. Seymour; (g) 23,920
shares of common stock and $144,600 of capital notes (4,819 shares)
held by INTRUST Bank, N.A., Trustee of Elizabeth Seymour Trust U/A dated
June 1, 1980 over which he shares voting and investment power with
Dorothea W. Seymour; (h) 23,920 shares of common stock and $144,600
of capital notes (4,819 shares) held by INTRUST Bank, N.A., Trustee of
Katherine Seymour Trust U/A dated February 11, 1981 over which he
shares voting and investment power with Dorothea W. Seymour;
(i) 2,025 shares of common stock held by Helen P. Seymour, Custodian
for Thomas Paul Seymour under UGTMA over which he shares voting and
investment power with Dorothea W. Seymour; (j) 1,800 shares of common
stock held by Helen P. Seymour, Custodian for Brooke Seymour under
UGTMA over which he shares voting and investment power with Dorothea W.
Seymour; (k) 1,700 shares of common stock held by Helen P. Seymour,
Custodian for Brian Piller Seymour under UGTMA over which he shares
voting and investment power with Dorothea W. Seymour.
Mr. Seymour has pledged 89,430 shares of common stock and $447,200 of
capital notes to IB to secure loan obligations to IB. Mr. Seymour
has filed a petition under Chapter 11 of the United States
Bankruptcy Code. (See Part 3, Item 10).
(10) Mr. Slawson's beneficial ownership is comprised of 100 shares of
common stock held in his name over which he has sole voting and
investment power and 2,586 shares of common stock held by Judith A.
Slawson (wife) over which he has shared voting and investment power.
(11) Mr. Thiessen's beneficial ownership is comprised of 2,960 shares of
common stock and $64,800 of capital notes (2,159 shares) held in
his name over which he has sole voting and investment power and
960 shares of common stock and $4,800 of capital notes (160 shares)
held by Lorraine Ross Thiessen (wife) over which he has shared
voting and investment power.
(12) Includes shares as to which beneficial owner shares investment
and/or voting power with others, after eliminating duplication
within the table.
Item 13. Certain Relationships and Related Transactions.
Certain Business Relationships
On January 25, 1995, Koch Industries, Inc. ("Koch"), in which
Charles G. Koch, a director and stockholder of the Company, owns
more than 10% of the common stock, purchased an investor
participation certificate in the amount of $50,000,000
representing an interest in the INTRUST Bank Credit Card Trust
1995-A at a certificate rate of 8.9% per annum. These
certificates were purchased by Koch pursuant to a Certificate
Purchase Agreement dated January 25, 1995 by and between INTRUST
Bank N.A. and Koch. Pursuant to a Pooling and Servicing
Agreement dated as of January 1, 1995, the First National Bank
of Chicago agreed to serve as the Trusteee of the INTRUST Credit
Card Trust 1995-A and INTRUST Bank N.A. agreed to be the
servicer of the accounts transferred to the Trust. Interest only
is due under the Certificate during the first two years of the
agreement and principal plus interest will be paid during the
third year of the agreement.
Neither the Company nor any of its subsidiaries entered into
during 1994 or has proposed to enter into any other material
transactions with officers, directors or principal stockholders
of the Company or its subsidiaries, or any immediate family
member of the foregoing persons who has the same home as such
person.
Indebtedness of Management
Paul Seymour, Jr., a director and stockholder of the Company,
who has filed a petition under Chapter 11 of the United States
Bankruptcy Code, was indebted to IB in the amounts of $2,129,761
and $320,359 for personal obligations and business loans,
respectively, at the end of the year. These amounts are also
the largest aggregate amounts of such indebtedness outstanding
at any time during the year. The rate of interest being charged
on the personal obligations and on $105,000 of the business
obligations at year end was 9.25 percent. The interest being
charged on the remainder of the business obligations is 8.75
percent. (Refer to the discussion regarding Mr. Seymour's
pledged stock under footnote (9) to the stock ownership table in
Item 12 above.)
There are outstanding loans by certain of the Subsidiary Banks
to other officer and directors of the Company or its
subsidiaries or to their immediate family members or associates,
but all such loans have been made in compliance with applicable
regulations, in the ordinary course of business, and on
substantially the same terms, including interest rates and
collateral, and the same underwriting standards as those
prevailing at the time for comparable transactions with other
persons. These loans did not involve more than the normal risk
of collectibility or present other unfavorable features.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following documents are filed as a part of this Report.
1. Financial Statements:
The following financial statements of INTRUST Financial Corporation
are included in PART II, Item 8 of this report.
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1994 and 1993
Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
2. Financial Statement Schedules:
All schedules are omitted because they are not applicable, or not
required, or because the required information is included in the
financial statements or notes thereto.
3. Exhibits:
Number Description
3(a) Restated Bylaws of the Registrant, as amended through
July, 1993 (appears herein as exhibit)
3(b) Restated Articles of Incorporation of Registrant, as
amended through July, 1993 (appears herein as exhibit)
4(a) Trust Indenture, dated as of December 1, 1987, between
First Bancorp of Kansas and Boatmen's First National Bank
of Kansas City (incorporated herein by reference to
Exhibit 4.1 to Registrant's Registration Statement
No. 33-17564)
10(a)* Description of INTRUST Bank, N.A. Executive Officers'
Deferred Compensation Plans (incorporated herein by
reference to Exhibit 10(h) to Registrant's 1993 10-K ,
File No. 2-78658)
10(b)* Description of INTRUST Financial Corporation Executive
Deferred Compensation Plan (incorporated herein by reference
to Exhibit 10(i) to Registrant's 1993 10-K, File No. 2-78658)
10(c)* Description of INTRUST Bank, N.A. Salary Continuation Plan
(incorporated herein by reference to Exhibit 10(j) to
Registrant's 1993 10-K, File No. 2-78658)
10(d)* Description of INTRUST Bank, N.A. Deferred Compensation
Plans for Directors (incorporated herein by reference to
Exhibit 10(k) to Registrant's 1993 10-K, File No. 2-78658)
10(e)* Description of INTRUST Financial Corporation Deferred
Compensation Plan for Directors (incorporated herein by
reference to Exhibit 10(l) to Registrant's 1993 10-K,
File No. 2-78658)
10(f) Agreement, dated February 15, 1991, between Resolution
Trust Corporation, receiver of Mid-Kansas Savings and Loan
Association, F.A. and the Registrant (incorporated herein
by reference to Exhibit 10(k) to Registrant's 1991 10-K,
File No. 2-78658)
10(g) Agreement and Plan of Reorganization and Merger, dated
June 8, 1992, between WRB Bancshares, Inc., Morrison
G. Tucker and Horace K. Calvert, Will Rogers Bank & Trust
Co., and the Registrant (incorporated herein by reference
to Exhibit 10(n) to Registrant's 1992 10-K, File No. 2-78658)
10(h) Stock Purchase Agreement, dated December 18, 1992,
between Kansas State Financial Corporation, George A. Angle,
Kansas State Bank & Trust Company, and First National Bank
in Wichita (incorporated herein by reference to Exhibit
10(o) to Registrant's 1992 10-K, File No. 2-78658)
10(i) Registrant's 1990 Stock Option Plan, adopted by the
shareholders April 10, 1990 (incorporated herein by
reference to Exhibit 10(k) to Registrant's 1990 10-K, File
No. 2-78658)
11 Computation of Earnings Per Share (appears herein as exhibit)
21 Subsidiaries of the Registrant (appears herein as exhibit)
23(a) Consent of KPMG Peat Marwick LLP (appears herein as exhibit)
23(b) Consent of Arthur Andersen LLP (appears herein as exhibit)
27 Financial Data Schedule (appears herein as exhibit)
* Exhibit relates to management compensation
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
INTRUST Financial Corporation
Date: March 14, 1995 By /s/ C. Q. Chandler
C. Q. Chandler
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
date indicated.
Date: March 14, 1995 /s/ C. Q. Chandler
C. Q. Chandler
Director, Chairman of the Board
and Chief Executive Officer
Date: March 14, 1995 /s/ Jay L. Smith
Jay L. Smith
Vice President and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Date: March 14, 1995 /s/ C. Robert Buford
C. Robert Buford
Director
Date: March 14, 1995 /s/ W. D. Bunten
William D. Bunten
Director
Date: March 14, 1995 /s/ Frank L. Carney
Frank L. Carney
Director
Date: March 14, 1995 /s/ Richard G. Chance
Richard G. Chance
Director
Date: March 14, 1995 /s/ C. Q. Chandler IV
C. Q. Chandler IV
Director
Date: March 14, 1995 /s/ George T. Chandler
George T. Chandler
Director
Date: March 14, 1995
Jamie B. Coulter
Director
Date: March 14, 1995 /s/ R. L. Darmon
R. L. Darmon
Director
Date: March 14, 1995 /s/ Charles W. Dieker
Charles W. Dieker
Director
Date: March 14, 1995 /s/ W. J. Easton
W. J. Easton Jr.
Director
Date: March 14, 1995 /s/ Martin K. Eby Jr.
Martin K. Eby Jr.
Director
Date: March 14, 1995 /s/ Eric T. Knorr
Eric T. Knorr
Director
Date: March 14, 1995
Charles G. Koch
Director
Date: March 14, 1995 /s/ J. V. Lentell
J. V. Lentell
Director
Date: March 14, 1995 /s/ Paul A. Seymour, Jr.
Paul A. Seymour, Jr.
Director
Date: March 14, 1995 /s/ Donald C. Slawson
Donald C. Slawson
Director
Date: March 14, 1995 /s/ John T. Stewart III
John T. Stewart III
Director
Date: March 14, 1995 /s/ Patrick H. Thiessen
Patrick H. Thiessen
Director
Supplemental Information to be Furnished with Reports
Pursuant to Section 15(d) of the Act by Registrants which have
not Registered Securities Pursuant to Section 12 of the Act.
Concurrently with the filing of this Form 10-K, Registrant is
furnishing the Commission, for its information, four copies of
INTRUST Financial Corporation's Annual Report to Shareholders
and Notice of Annual Meeting of Shareholders and form of proxy
with respect to the annual meeting of shareholders of Registrant
to be held April 11, 1995.
INDEX TO EXHIBITS
EXHIBIT # DESCRIPTION
3(a) Restated Bylaws of the Registrant, as amended through July, 1993
3(b) Restated Articles of Incorporation of Registrant, as amended
through July, 1993
11 Computation of Earnings Per Share
21 Subsidiaries of the Registrant
23(a) Consent of KPMG Peat Marwick LLP
23(b) Consent of Arthur Andersen LLP
27 Financial Data Schedule
RESTATED BY-LAWS
OF
INTRUST FINANCIAL CORPORATION
ARTICLE I GOVERNMENT
Section 1. Government and Control. The government and control
of the corporation shall be vested in a Board of Directors.
ARTICLE II OFFICES
Section 1. The principal offices of the corporation shall be in
the City of Wichita, Kansas, and the registered office is 105
North Main, Wichita, Kansas. The name of the resident agent is
Douglas C. Winkley, 105 North Main, Wichita, Kansas.
The corporation may also have offices at such other places as
the Board of Directors may from time to time designate, within
or without the State of Kansas, as the business of the
corporation may require.
ARTICLE III CORPORATE SEAL
Section 1. The corporate seal of this corporation shall be
circular and shall contain the full corporate name in the upper
arc of the circle; the word "Kansas" in the lower arc of the
circle; and the words "Corporate Seal" in the center thereof.
ARTICLE IV CONVEYANCES
Section 1. Any and all instruments, including deeds,
assignments, mortgages, pledges, releases, trust indentures, or
other instruments of conveyance, transfer, mortgage or pledge,
shall be deemed to be valid and sufficient when the same are
signed and executed in the name of the corporation (and
acknowledged when
required) by either the Chief Executive Officer, the President
or Vice President, and when a seal is required--sealed with the
corporate seal and attested by the Secretary.
ARTICLE V STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders
shall be held at the principal office of the corporation, or at
such other places as may be designated by the Board of
Directors, either within or without the State of Kansas.
Section 2. Date of Annual Meeting. The annual meeting of the
stockholders shall be held on the second Tuesday in April, if
not a legal holiday and if a legal holiday, then on the next
secular day following, at 1:30 o'clock p.m. At such meeting,
the stockholders shall elect by a vote representing a majority
of all stock present and voting in person or by proxy, a Board
of Directors, and transact such other business as may be
properly brought before the meeting.
Section 3. Quorum. The holders of a majority of the common
stock issued, outstanding, and entitled to vote at said meeting
present in person or represented by proxy shall be requisite for
and shall constitute a quorum at all meetings of the
stockholders, for the transaction of business, except as
otherwise provided by law, by the certificate of incorporation
or by these by-laws. If, however, such majority shall not be
personally present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat present
in person or by proxy shall have power to adjourn the meeting
from time to time without notice, other than announcement at the
meeting, until the requisite amount of voting stock shall be
present at an adjourned meeting, at which meeting any business
may be transacted which might have been transacted at the
meeting as originally scheduled.
Section 4. Voting Power and Who May Vote. At each meeting of
the stockholders, each stockholder shall be entitled to one vote
in person or by proxy for each share of the common capital stock
of the corporation held by such stockholder. All proxies shall
be in writing, subscribed by the stockholder or his duly
authorized agent, and delivered to the Secretary before the
convening of the meeting at which the proxy is to be exercised.
Section 5. Vote Taken by Ballot, Viva Voce, or by Showing of
Hands. All elections of directors, and the vote upon any other
question, except as otherwise provided by law, may be either by
ballot, viva voce, or by showing of hands, unless, on a vote of
a director, or directors, a stockholder requests in writing a
vote by ballot, and then the election of such director or
directors shall be by secret written ballot.
Section 6. Notice of Annual Meeting. Written notice of the
annual meeting shall be mailed by the Secretary to each
stockholder entitled to vote thereat, at the last address
appearing on the stock book of the corporation of each
stockholder, at least 10 days prior to the date of the meeting,
unless such notice is waived in writing.
Section 7. Special Meetings. Special meetings of the
stockholders for any purpose, purposes, unless otherwise
prescribed by statute, may be called by the Board of Directors,
the President, or the Acting President, or by the Secretary upon
the written request of the owners of 20 percent of the stock
entitled to vote at an annual meeting. Such request shall state
the purpose or purposes of the proposed meeting; and said
meeting shall be held at the principal office of the corporation.
Section 8. Business Transacted. Business transacted at all
special meetings shall be confined to the object stated in the
call.
Section 9. Notice of Special Meeting. Written notice of all
special meetings of the stockholders, stating the time, place
and object thereof, shall be mailed, postage prepaid at least 5
days before such meeting, to each stockholder entitled to vote
thereat, at the last address appearing on the books of the
corporation for each stockholder, unless notice is waived in
writing.
Section 10. Roster of Stockholders. At each annual or special
meeting of the stockholders, the Secretary shall have available
for the examination of any stockholder a complete and duly
certified list of all stockholders entitled to vote and the
number of voting shares held by each stockholder.
ARTICLE VI DIRECTORS
Section 1. Number and Qualification. The number of directors of
the corporation shall be not less than three (3). The Board of
Directors is authorized to establish by a majority vote the
number of directors from time to time up to a maximum of
twenty-five (25). In the event the directors vote to increase
the number of directors during the year, any new director shall
be elected by a majority vote of the current directors and shall
serve until the next annual stockholder meeting. The directors
shall be divided into three (3) classes with the number in each
class to be determined by the directors, and shall be elected at
the annual meeting of the stockholders as provided in the
Articles of Incorporation. A director shall be deemed qualified
after filing a written acceptance to the office.
Section 2. Quorum. A majority of the duly elected and qualified
directors shall constitute a quorum for the transaction of
business. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 3. Place of Meeting. The directors may hold their
meetings at the registered office of the corporation in the City
of Wichita, Kansas, or at such other place or places as they may
from time to time determine, either within or without the State
of Kansas.
Section 4. Annual Meetings of the Board. The annual meeting of
the Board of Directors for the election of officers and
transaction of other business, shall be held immediately
following the annual stockholders' meeting, or at such other
time or place as may be fixed by the written consent of all of
the directors; provided, however, that in the event the consent
in writing is not obtained of all the directors, the annual
meeting shall be held at the same place as and immediately
following the annual meeting of the stockholders.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by the Chief Executive Officer,
President, or by any two members of the Board of Directors, on
two days' notice in writing to each director, such notice to be
served personally, by mail, or by telegram.
ARTICLE VII OFFICERS
Section 1. Designated Officer. The officers of the corporation
shall be chosen by the Board of Directors and shall consist of a
Chief Executive Officer, a President, a Vice President and a
Secretary and Treasurer.
Section 2. Other Officers. The corporation may have such other
officers and agents as may from time to time be determined and
appointed by the Board of Directors.
Section 3. Term and Qualification of Officers. The Officers of
the corporation shall hold their office until the next annual
meeting of the Board of Directors, or until their successors are
chosen and qualified, unless their respective terms of office
shall be sooner terminated by death, resignation, or otherwise,
in writing, duly filed in the registered office of the
corporation.
All unexpired terms of office vacated shall be filled by the
Board of Directors, at a special meeting held for that purpose.
Section 4. Salaries. The salaries of the officers of the
corporation shall be fixed by the Board of Directors.
Section 5. Removal of Officers. Any officer elected or
appointed by the Board of Directors may be removed at any time
by the affirmative vote of a majority of the entire Board of
Directors.
Section 6. President and Chief Executive Officer. The chief
executive officer shall preside at all meetings of the
stockholders and directors, and shall have ultimate
responsibility and authority for carrying out the orders and
resolutions of the board of directors of the corporation. The
president shall be the chief operating officer of the
corporation, and shall have general and active management of the
business of the corporation. He shall execute bonds, mortgages
and other instruments requiring a seal under the seal of the
corporation, and shall keep in safe custody the seal of the
corporation, and shall affix the same to any instrument
requiring it, and, when so affixed, it shall be attested by the
signature of the secretary.
Section 7. Vice President. During the absence or incapacity of
the President, all of the powers, duties and responsibilities of
the President shall devolve upon the Vice President.
Section 8. Secretary. As Secretary, he shall attend all
sessions of the Board of Directors and all meetings of the
stockholders, and record all votes and the minutes of all
proceedings in a book to be kept for that purpose. In the
absence of the President and Vice President, he shall preside at
meetings of the directors or stockholders. He shall give, or
cause to be given, the required notice of all meetings of the
stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors
or the President, under whose supervision he shall be.
Section 9. Treasurer. As Treasurer, he shall keep the books of
the corporation and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose
supervision he shall be. He shall give bond as required by
statute.
Section 10. Failure to Elect. Vacancies. The failure to elect
annually any officers or directors shall not dissolve the
corporation.
Vacancies occurring in the Board of Directors by reason of
death, resignation, retirement, disqualification, removal from
office, or otherwise, shall be filled by the remaining members
of the Board of Directors. A majority vote of the remaining
directors shall be sufficient to elect a successor, or
successors, who shall hold office for the unexpired term, or
terms, in respect to which such vacancy occurred.
ARTICLE VIII CAPITAL STOCK
Section 1. Amount. The total amount of capital of the
corporation shall be fifty million dollars ($50,000,000)
represented by ten million (10,000,000) shares of the common
stock with a par value of five dollars ($5.00) each.
Section 2. Certificate. The certificate of stock of the
corporation shall be numbered and shall be entered in the books
of the corporation as they are issued. They shall exhibit the
holder's name, the number of shares, all other information
required by statute, and shall be signed by the President and
the Secretary.
Section 3. Transfer of Stock. Transfers of stock shall be made
on the books of the corporation only by the person named in the
certificate, or by his attorney duly appointed in writing, and
upon surrender of the certificate for said stock.
Section 4. Closing of Transfer Book. The stock transfer book of
the corporation shall be closed 15 days before each annual or
special meeting and 15 days before any dividend paying date.
ARTICLE IX MISCELLANEOUS
Section 1. Fiscal Year. The fiscal year of the corporation
shall begin on the first day of January of each year.
Section 2. Dividends. The Directors may from time to time
declare dividends upon the capital stock from the surplus or net
profits of the corporation, provided the financial position of
the corporation is such that the payment of any such dividend
will not impair the working capital of the corporation.
Section 3. Notices. Whenever, under the provision of these
By-Laws, notice is required to be given to any director, officer
or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, by
depositing the same in the post office in a postpaid sealed
wrapper, addressed to such stockholder, officer or director, at
such address as appears on the books of the corporation; or, in
default of other address, to such director, officer or
stockholder, in the general post office in the City of Wichita,
Kansas, and such notice shall be deemed to be given at the time
when the same shall be thus mailed.
Any stockholder, director or officer may waive any notice
required to be given under these By-Laws.
ARTICLE X AMENDMENTS
Section 1. These By-Laws may be altered, repealed or amended by
the Board of Directors at the annual meeting, or at any special
meeting of the Board of Directors called for that purpose, by a
majority vote of all of the duly elected and qualified
directors; provided, however, notice of any such action by the
Board of Directors shall be given to each stockholder having
voting rights, at some time within the year following the date
of such action by the Board of Directors.
ADOPTED on this 17th day of June, 1971.
AS AMENDED, through July 1993.
________________________________________
Douglas Winkley, Secretary and Treasurer
RESTATED ARTICLES OF INCORPORATION
We, the undersigned, incorporators, hereby associate ourselves
together to form and establish a corporation FOR profit under
the laws of the State of Kansas.
FIRST: The Name of the Corporation is INTRUST FINANCIAL
CORPORATION.
SECOND: The Location of its Principal Place of Business in
this state is 105 North Main, Wichita, Kansas 67202.
THIRD: The location of its registered office in Kansas is 105
North Main, Wichita, Sedgwick County, Kansas, 67202, and the
resident agent in charge thereof at such address is Douglas C.
Winkley.
FOURTH: This Corporation is organized FOR profit and the
nature of its business is:
To acquire by purchase, exchange or otherwise, the capital
stock of any state or national bank located within or without
the boundaries of the State of Kansas; provided, however, the
corporation shall not acquire control of more than one bank,
either state or national, if such control as defined by the
statutes of the State of Kansas or the laws of the United States
shall be prohibited;
To manufacture, purchase or acquire, in any lawful manner, to
hold or own, to mortgage, pledge, sell, transfer or in any other
lawful manner dispose of, and to deal and trade in goods, wares,
merchandise, manufacture and property of any and every class and
description; and to engage in any lawful trade, business or
manufacture whatsoever, either as principal or as agent, or in
combination with others, at any place within or without the
State of Kansas;
To subscribe for, purchase, or otherwise acquire, to guarantee,
hold or own, to sell, assign, transfer, mortgage, pledge or
otherwise dispose of the property, both real and personal, or
the shares of the capital stock, or any bonds, securities, or
other evidences of indebtedness created by any other corporation
of this state, or of any other state, country, nation or
government, or governmental unit whatsoever, and while owner of
such property or stock or evidences of indebtedness, to exercise
all the rights, powers, and privileges of ownership appurtenant
thereto;
To purchase, hold, sell and transfer shares of its own capital
stock; but the corporation shall not use its funds or property
for the purchase of its own shares of capital stock when such
use would cause any impairment of the capital of the corporation;
To lend and borrow money, and to issue notes, bonds,
debentures, and other evidences of indebtedness, and to
mortgage, pledge and hypothecate any and all of the real and
personal property of the corporation, both within and without
the State of Kansas; and, generally, to do all other things
incident to carrying out the objects aforesaid, or expedient and
convenient in the prosecution of the business of the
corporation; and to have and exercise all the powers necessary
to carry said objects into effect;
Without in any way limiting or restricting the objects and
powers of the corporation hereinbefore enumerated, for the
purpose of attaining and furthering its objects, the corporation
shall have the power to do any and all other acts and things,
and to exercise all other powers which are now, or may be
hereafter, authorized by law; it being hereby expressly provided
that the foregoing enumeration and reiteration of specific
objects and powers shall not be held to limit in any manner the
general powers of the corporation; and all of the foregoing
powers shall be available to, and may be exercised by, the
corporation, both within and without the State of Kansas.
FIFTH: The total amount of capital of this corporation is
Fifty Million ($50,000,000), and the total number of shares into
which it is divided is as follows:
10,000,000 shares of common stock, par value of Five Dollars
($5.00) each.
SIXTH: The Amount of Capital with which this Corporation will
commence business is One Thousand Dollars ($1,000.00).
SEVENTH: The Names and Places of Residence (P.O. Address) of
each of the INCORPORATORS:
JEROME E. JONES - 1022 Union Center Building, Wichita, Kansas
67202
H.E. JONES - 1022 Union Center Building, Wichita, Kansas 67202
RICHARD JONES - 1022 Union Center Building, Wichita, Kansas
67202
EIGHTH: The Term for which this Corporation is to exist is ONE
HUNDRED YEARS.
NINTH: The Number of Directors shall be not less than three
(3) with the maximum number to be determined from time to time
as prescribed by the By-Laws. The Directors shall be divided
into three (3) classes; the term of office of those in the first
class to expire at the 1990 annual meeting; the term of office
of those in the second class to expire at the 1991 annual
meeting; and the term of office of those in the third class to
expire at the 1992 annual meeting. At each annual election held
after such classification and election, Directors shall be
chosen for a full three (3) year term to succeed those whose
terms expire.
TENTH: (a) No Director of this Corporation shall be held
personally liable to this Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director
including merger and acquisition decisions, provided that this
provision shall not eliminate or limit the liability of a
Director (1) for any breach of the Director's duty of loyalty to
this Corporation or its stockholders, (2) for acts or omissions
not in
good faith or which involve intentional misconduct or a knowing
violation of law, (3) under the provisions of K.S.A. 17-6424 and
any amendments thereto, or (4) for any transaction from which
the Director derived an improper personal benefit. In
connection with merger and acquisition decisions, a Director may
consider factors in addition to financial adequacy of the
offered price such as the impact on employees, customers and the
community. (b) This Article shall not eliminate or limit the
liability of a Director for any act or omission occurring prior
to the effective date of the Amendment adding this Article TENTH
to the Restated Articles of Incorporation of this Corporation.
(c) Any repeal or modification of this Article shall be
prospective only and shall not adversely affect any limitation
on the personal liability of a Director of this Corporation
existing at the time of such repeal or modification.
ELEVENTH: Any person, or such person's heir, executor or
administrator may be indemnified or reimbursed by the
Corporation for reasonable expenses actually incurred in
connection with any action, suit or proceeding, civil or
criminal, to which such person shall be made a party by reason
of being or having been a director, officer or employee of the
Corporation or of any firm, corporation or organization which
such person served in any such capacity at the request of the
Corporation; provided, however, that no person shall be so
indemnified or reimbursed in relation to any matter in such
action, suit or proceeding as to which such person shall finally
be adjudged to have been guilty of or liable for gross
negligence, willful misconduct or criminal acts in the
performance of such person's duties to the Corporation; and,
provided further, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit or
proceeding which has been made the subject of a compromise
settlement, except with the approval of a court of competent
jurisdiction, or the holders of record of a majority of the
outstanding shares of the Corporation, or the Board of
Directors, acting by vote of Directors not parties to the same
or substantially the same action, suit or proceeding,
constituting a majority of the whole number of Directors. The
foregoing right of indemnification or reimbursement shall
specifically include all matters arising from merger and
acquisition decisions made by the director, officer or employee
and shall not be exclusive of other rights to which such person,
or such person's heir, executor or administrator may be entitled
as a matter of law.
The Corporation may, upon the affirmative vote of a majority of
its Board of Directors, purchase insurance for the purpose of
indemnifying its directors, officers and other employees to the
extent that such indemnification is allowed in the preceding
paragraph. Such insurance may, but need not, be for the benefit
of all directors, officers or employees.
IN TESTIMONY WHEREOF, we have hereunto subscribed our names
this 27th day of May, A.D. 1971.
/s/ Jerome E. Jones
/s/ H.E. Jones
/s/ Richard Jones
AS AMENDED, through July 1993.
______________________________________
Douglas C. Winkley, Secretary
<TABLE>
EXHIBIT 11
INTRUST FINANCIAL CORPORATION
Computation of Earnings Per Share
Years Ended December 31, 1994, 1993 and 1992
(Dollars in thousands except per share data)
1994 1993 1992
<S> <C> <C> <C>
Primary Earnings Per Share:
Income before cumulative effect of accounting change $18,969 $17,626 $15,834
Cumulative effect of accounting change - - 1,679
Net income $18,969 $17,626 $17,513
Weighted average common shares outstanding 2,371,377 2,381,859 2,395,694
Primary earnings per share before cumulative effect of
accounting change $8.00 $7.40 $6.61
Cumulative effect of accounting change - - .70
Primary earnings per share $8.00 $7.40 $7.31
Fully Diluted Earnings per Share:
Income before cumulative effect of accounting change $18,969 $17,626 $15,834
Net reduction in interest expense assuming conversion of
capital notes 713 713 713
$19,682 18,339 16,547
Cumulative effect of accounting change - - 1,679
Net income $19,682 $18,339 $18,226
Weighted average common shares outstanding assuming
conversion of capital notes 2,771,377 2,781,859 2,795,694
Fully diluted earnings per share before cumulative effect of
accounting change $7.10 $6.59 $5.92
Cumulative effect of accounting change - - .66
Fully diluted earnings per share $7.10 $6.59 $6.52
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1994
PERCENTAGE
OF VOTING
JURISDICTION SECURITIES
NAME OF ORGANIZATION OWNED
INTRUST Bank, National National Banking Act
100%
Association
INTRUST Bank, El Dorado, National National Banking Act
100%
Association
INTRUST Bank, Haysville, National National Banking Act
100%
Association
INTRUST Bank, Johnson County, National Banking Act
100%
National Association
INTRUST Bank, Valley Center Kansas State Banking Code
100%
Will Rogers Bank Oklahoma State Banking Code
100%
The First Bank Oklahoma State Banking Code
100%
First Moore Insurance Agency, Inc. Oklahoma Insurance Statutes
100%
Note: As of February 11, 1995, INTRUST Bank, El Dorado,
National Association, INTRUST Bank, Haysville, National
Association, INTRUST Bank, Johnson County, National Association
and INTRUST Bank, Valley Center no longer operate as separate
subsidiaries of the Company, having merged into INTRUST Bank,
National Association.
EXHIBIT 23(a)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
INTRUST Financial Corporation:
We consent to incorporation by reference in the registration
statement (no. 33-41889) on Form S-8 of INTRUST Financial
Corporation of our report dated February 4, 1994, relating to
the consolidated balance sheet of INTRUST Financial Corporation
and subsidiaries as of December 31, 1993, and the related
consolidated statements of income, stockholders' equity and cash
flows for each of the years in the two-year period ended
December 31, 1993, which report appears in the December 31, 1994
annual report on Form 10-K of INTRUST Financial Corporation.
Our report refers to a change in the method of accounting for
income taxes.
KPMG Peat Marwick LLP
Wichita, Kansas
March 27, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 81,084
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 33,805
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 276,779
<INVESTMENTS-MARKET> 273,830
<LOANS> 1,037,944
<ALLOWANCE> 19,886
<TOTAL-ASSETS> 1,519,117
<DEPOSITS> 1,276,076
<SHORT-TERM> 67,793
<LIABILITIES-OTHER> 12,708
<LONG-TERM> 34,950
<COMMON> 12,000
0
0
<OTHER-SE> 115,590
<TOTAL-LIABILITIES-AND-EQUITY> 1,519,117
<INTEREST-LOAN> 92,130
<INTEREST-INVEST> 15,938
<INTEREST-OTHER> 2,315
<INTEREST-TOTAL> 110,383
<INTEREST-DEPOSIT> 33,164
<INTEREST-EXPENSE> 38,267
<INTEREST-INCOME-NET> 72,116
<LOAN-LOSSES> 2,962
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 66,189
<INCOME-PRETAX> 29,853
<INCOME-PRE-EXTRAORDINARY> 18,969
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,969
<EPS-PRIMARY> 8.00
<EPS-DILUTED> 7.10
<YIELD-ACTUAL> 5.25
<LOANS-NON> 2,843
<LOANS-PAST> 3,074
<LOANS-TROUBLED> 336
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 21,793
<CHARGE-OFFS> 7,534
<RECOVERIES> 2,501
<ALLOWANCE-CLOSE> 19,886
<ALLOWANCE-DOMESTIC> 19,886
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into
the Company's (Formerly First Bancorp of Kansas) previously
filed Registration Statement File No. 33-41889, on Form S-8.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma
March 24, 1995
