UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from
___________ to ___________
Commission File Number 0-14412
Farmers Capital Bank Corporation
(Exact name of registrant as specified in its charter)
Kentucky 61-1017851
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 309, West Main Street
Frankfort, Kentucky 40602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502)227-1600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common stock, par value $0.25 per share
3,866,382 shares outstanding at November 10, 1994
TABLE OF CONTENTS
Part I - Financial Information Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets
September 30, 1994 and December 31, 1993 3
Consolidated Statements of Income -
For the Nine Months Ended
September 30, 1994 and September 30, 1993 4
Consolidated Statements of Cash Flows -
For the Nine Months Ended
September 30, 1994 and September 30, 1993 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 4 - Results of votes of security holders 13
Item 5 - Other information 14
Item 6(b) - Reports on Form 8-K 14
FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
(unaudited)
September 30, December 31,
1994 1993
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 61,951 $ 43,171
Federal Funds sold and securities
purchased under agreement to resell 44,950 54,613
Total cash and cash equivalents 106,901 97,784
Investment securities 184,060 188,866
Loans and lease financings 534,794 490,345
Less: Allowance for loan losses (9,106) (8,547)
Unearned income (11,035) (8,708)
Net loans and lease financings 514,653 473,090
Bank premises and equipment 19,729 20,504
Interest receivable 6,367 6,420
Other assets 6,843 7,605
TOTAL ASSETS $838,553 $794,269
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing $120,633 $ 92,128
Interest bearing 578,205 566,111
Total deposits 698,838 658,239
Other borrowed funds 34,897 35,332
Dividends payable 1,160 1,160
Interest payable 1,439 1,475
Other liabilities 3,574 2,972
Total liabilities 739,908 699,178
SHAREHOLDERS' EQUITY
Common stock, par value $.25 per share
4,804,000 shares authorized; 3,866,382
shares issued and outstanding at
September 30, 1994 and December 31, 1993 967 967
Capital surplus 9,094 9,094
Retained earnings 88,942 85,030
Unrealized net loss on securities
available for sale (358)
Total shareholders' equity 98,645 95,091
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $838,553 $794,269
See notes to consolidated financial statements
FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
INTEREST INCOME
Interest and fees on loans $11,955 $10,821 $34,095 $32,062
Interest on investment securities:
Taxable 1,524 1,750 4,487 5,859
Nontaxable 586 432 1,716 1,060
Interest on deposits in other banks 13 13 38 32
Interest on federal funds sold and
securities purchased under
agreements to resell 687 531 1,646 1,773
Total interest income 14,765 13,547 41,982 40,786
INTEREST EXPENSE
Interest on deposits 5,116 5,073 14,678 15,817
Interest on federal funds purchased and
securities sold under agreements to
repurchase 373 252 863 647
Other 57 39 144 113
Total interest expense 5,546 5,364 15,685 16,577
Net interest income 9,219 8,183 26,297 24,209
Provision for loan losses 498 (4,634) 1,564 (2,794)
Net interest income after provision for
loan losses 8,721 12,817 24,733 27,003
NONINTEREST INCOME
Service charges and fees 1,060 1,111 2,991 3,252
Trust income 222 251 796 723
Investment securities gains (losses) 9 (75) 60
Other 1,517 1,245 4,924 3,993
Total noninterest income 2,799 2,616 8,636 8,028
NONINTEREST EXPENSE
Salaries and employee benefits 4,048 3,840 11,702 11,176
Occupancy expenses, net of rental
income 496 482 1,536 1,468
Equipment expense 581 659 1,847 2,000
Bank shares tax 297 235 826 707
FDIC insurance 384 398 1,133 1,189
Other 2,077 1,734 5,817 5,588
Total noninterest expense 7,883 7,348 22,861 22,128
Income before income taxes and
cumulative effect of change in
accounting principle 3,637 8,085 10,508 12,903
Income tax expense 1,059 2,720 3,116 4,126
Income before cumulative effect of change
in accounting principle 2,578 5,365 7,392 8,777
Cumulative effect of change in accounting
principle 380
NET INCOME $ 2,578 $ 5,365 $ 7,392 $ 9,157
Per common share:
Income before cumulative change
in accounting principle $.67 $1.39 $1.91 $2.27
Cumulative effect of change in
accounting principle .10
Net income $.67 $1.39 $1.91 $2.37
Dividends declared $.30 $.27 $.90 $.81
Weighted average shares outstanding 3,866 3,866 3,866 3,866
See notes to consolidated financial statements
FARMERS CAPITAL BANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(unaudited)
Nine Months Ended
September 30,
1994 1993
Cash flows from operating activities
Net Income $ 7,392 $ 9,157
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,869 1,717
Net amortization of investment securities
premiums and discounts:
Available for sale 141
Held to maturity 242 738
Provision for loan losses 1,564 (2,794)
Deferred income tax (10) (309)
Loss (gain) on sale of fixed assets 2 (1)
Loss (gain) on sale of securities:
Available for sale 78
Held to maturity (3) (60)
Changes in:
Interest receivable 53 128
Other assets 531 2,849
Interest payable (36) (338)
Other liabilities 602 4,776
Net cash provided by operating activities 12,425 15,863
Cash flows from investing activities
Proceeds from maturity of investment securities:
Available for sale 52,237
Held to maturity 20,711 57,580
Proceeds from sale of investment securities:
Available for sale 11,603
Held to maturity 8,998
Purchase of investment securities:
Available for sale (49,991)
Held to maturity (30,753) (78,279)
Net increase in loans (43,127) (13,074)
Purchase of bank premises and equipment (673) (957)
Proceeds from sale of equipment 1 16
Net cash used in investing activities (39,992) (25,716)
Cash flows from financing activities:
Net increase (decrease) in deposits 40,599 (9,736)
Dividends paid (3,480) (3,144)
Net decrease in other borrowed funds (435) (5,831)
Decrease in debt (3,775)
Net cash provided by (used in) financing activities 36,684 (22,486)
Net change in cash and cash equivalents 9,117 (32,339)
Cash and cash equivalents at beginning of year 97,784 166,001
Cash and cash equivalents at end of period $106,901 $133,662
Supplemental disclosures:
Cash paid during the year for:
Interest $ 15,721 $ 16,239
Income taxes 3,155 2,387
See notes to consolidated financial statements
FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation, have been included. Operating results for the period
ended September 30, 1994 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1994. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1993.
NOTE 2 - BOND CLAIM
During 1991, First Citizens Bank, Hardin County (the "Bank"), a subsidiary of
the Company, filed a bond claim for $6,800,000 with its bonding company to
recover losses incurred in 1990 resulting from an apparent scheme to defraud
the Bank. After exhaustive efforts to settle the claim with the bonding
company, the Bank initiated litigation during the first quarter of 1992
against the bonding company. During the third quarter of 1993, the Company
reached a settlement in the amount of $5,279,000 which was accounted for as
a loan loss recovery. Loan loss recoveries result in an increase in the
Allowance for Loan Losses (Allowance). The Allowance was subsequently
adjusted to the amount necessary, as determined by management, to
absorb possible future losses on the total loans currently outstanding. The
adjustment resulted in a reduction in the provision for loan losses to the
extent that the provision for the year was negative.
NOTE 3 - SFAS NO. 114
In May 1993, the FASB issued Statement of Financial Accounting Standards
No. 114, Accounting by Creditors for Impairment of a Loan ("SFAS 114"),
which addresses the accounting by creditors for impairment of a loan by
specifying how allowances for credit losses related to certain loans should
be determined. This Statement also addresses the accounting by creditors for
all loans that are restructured in a troubled debt restructuring involving a
modification of terms of a receivable.
An impaired loan shall be measured by the present value of expected future
cash flows discounted at the loan's effective interest rate, except that as a
practical expedient, at the loan's observable market price or the fair value
of the collateral if the loan is collateral dependant. If the measure of of
the impaired loan is less that the recorded investment, an impairment will be
recognized by creating a valuation allowance with a corresponding charge to
bad debt expense. SFAS 114 shall be effective for fiscal years beginning
after December 15, 1994. The impact on the financial statements is not known
at this time.
NOTE 4 - INVESTMENT SECURITIES
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. Accordingly, debt securities where the company does not
have the positive intent or ability to hold to maturity are classified as
securities available for sale and are carried at market value. Unrealized
gains and losses on securities available for sale are reported as a separate
component of shareholders' equity, net of tax effect. Prior to the adoption
of this statement, securities were carried at amortized cost. The following
summarizes the amortized cost and estimated fair values of the securities
portfolio at September 30, 1994. The summary is divided into available for
sale and held to maturity securities.
Investment securities - available for sale
(In thousand)
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 1994 Cost Gains Losses Value
U.S. Treasury $12,991 $ 8 $152 $12,847
Obligations of U.S.
Government agencies 47,206 2 407 46,801
Mortgage-backed Securities 3,996 6 1 14,001
Other securities 3,629 3,629
Total securities available
for sale $67,822 $16 $560 $67,278
Investment securities - held to maturity
(In thousands)
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
September 30, 1994 Cost Gains Losses Value
U.S. Treasury $ 44,578 $ 10 $ 505 $ 44,083
Obligations of U.S.
Government agencies 18,186 18 784 17,420
Obligations of states
and political subdivisions 50,184 533 1,249 49,468
Mortgage-backed securities 2,123 149 1,974
Other securities 1,711 7 36 1,682
Total securities held to
maturity $116,782 $568 $2,723 $114,627
The following summarizes the amortized cost and estimated fair values of the
securities portfolio at December 31, 1993. On December 31, 1993, the
securities were carried at amortized cost.
(In thousands) Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1993 Cost Gains Losses Value
U.S. Treasury $ 67,355 $ 431 $ 32 $ 67,754
Obligations of U.S.
Government agencies 68,529 215 60 68,684
Obligations of states and
political subdivisions 46,081 1,098 220 46,959
Mortgage-backed securities 5,792 12 46 5,758
Other securities 1,109 26 1,135
Total securities $188,866 $1,782 $358 $190,290
5. NONRECURRING EVENT
Net income increased by $503,000 during the first nine months of 1994 due to
a non-recurring recovery of prior year losses. This recovery occurred in
the second quarter.
FARMERS CAPITAL BANK CORPORATION AND SUBSIDIARIES
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THIRD QUARTER 1994 VS. THIRD QUARTER 1993
The Company reported earnings of $2.6 million, or $.67 per share, for the
third quarter of 1994 compared to $5.4 million, or $1.39 per share one year
ago.
During the third quarter of 1993, the Company reached a bond claim settlement
which resulted in a $3.5 million increase of net income. Adjusting the
third quarter of 1993 for this item, net income would be $1.9 million, or
$ .49 per share.
Return on average assets and return on average equity for the third quarter of
1994 were 1.22% and 10.53%, respectively, compared to 2.63% and 23.00% for
the same period in 1993. After adjusting the third quarter of 1993 for the
bond claim settlement, third quarter 1994 return on average assets and
return on average equity actually increased by 30 and 253 basis points,
respectively. Return on average assets and return on average equity for the
third quarter of 1993 after the adjustment, were .92% and 8.00%, respectively.
Net Interest Income
Net interest income totaled $9.2 million for the third quarter of 1994,
compared to $8.2 million one year ago. The net interest margin (net
interest income as a percentage of average earning assets), increased to
5.08% compared to 4.76% a year ago while the spread between rates earned
and paid increased to 4.49% from 4.22%.
Asset Quality
The provision for loan losses increased $5.1 million compared to the third
quarter of 1993. This increase is primarily a result of the bond claim
settlement, which subsequently resulted in a negative provision for loan
losses for the period. The settlement increased the Allowance for Loan
Losses (Allowance) by an amount management felt exceeded the amount necessary
to absorb possible future loan losses. Management subsequently reduced the
Allowance balance to the amount necessary to absorb possible future losses
on the total loans outstanding at that time, thus the resultant negative
provision.
Excluding the bond claim settlement, the provision for loan losses actually
decreased $147 thousand, or 23% during the period. The Corporation had net
charge-offs of $502 thousand during the quarter compared to net charge-offs
of $428 thousand during the same time period in 1993. Management continues
to emphasize collection efforts and evaluation of the risks within the loan
portfolio.
Noninterest Income
Noninterest income of $2.8 million increased $183 thousand, or 7.0%, from the
third quarter of last year. Service charges on deposits decreased $51
thousand, or 4.6%. Trust fees decreased $29 thousand, or 11.6%. Other
income increased $272 thousand as compared to the same time period in 1993,
this variance consists of several different items.
Noninterest Expense
Total noninterest expense increased $535 thousand, or 7.3% from the third
quarter of last year. Salaries and benefits, the largest component, increased
$208 thousand, or 5.4%. Occupancy expense, net of rental income, increased
$14 thousand, or 2.9%. FDIC insurance premiums increased $14 thousand to
$384 thousand. Taxes on bank shares increased $62 thousand to $297 thousand.
Equipment expense decreased $78 thousand, or 11.8%.
Income taxes
Income tax expense decreased $1.6 million, or 61.1% from the same time period
last year. The change in income tax expense is mostly attributable to the
decrease in income before taxes of $4.4 million, or 55.0%. The 1994
effective rate is 29% compared to 34% in 1993. The 1993 rate was greatly
affected by the bond claim settlement.
FIRST NINE MONTHS OF 1994
Net income for the nine months was $7.4 million, or $1.91 per share compared to
$9.2 million, or $2.37 per share for the same time period in 1993.
Return on average assets was 1.17%, a decrease from 1.50% in 1993. Return on
average equity was 10.22%, a decrease from 13.44% in 1993.
Net income after taxes was affected by the following items during the first
nine months of 1993 and 1994:
A nonrecurring recovery of prior year losses increased 1994 net income
by $503 thousand.
The Company reached a bond claim settlement which increased 1993
net income by $3.5 million.
The adoption of SFAS 109 - Accounting for Income Taxes increased
1993 net income by $380 thousand.
Adjusting each year by the items mentioned above, net income would be $6.9
million, or $1.78 per share in 1994, and $5.3 million, or $1.38 per share
in 1993. After the adjustments, 1994 return on average assets and return on
average equity would be 1.09% and 9.52%, respectively compared to .86% and
9.52% for 1993.
Net Interest Income
Net interest income for the first nine months totalled $26.3 million, compared
to $24.2 million last year. The majority of the increase can be primarily
attributed to the following:
A $2.0 million increase in loan interest
A $1.1 million decrease in interest expense on deposits
A $716 thousand decrease in interest on securities
The net interest margin increased to 4.94% compared to 4.66% in 1993. The
spread between rates earned and paid increased to 4.38% compared to 4.14%
in 1993.
Asset Quality
The provision for loan losses increased $4.4 million, as compared to the first
nine months of 1993. This increase is primarily a result of the accounting
for the 1993 bond claim settlement, which subsequently resulted in a negative
provision for loan losses for that period in 1993. The settlement increased
the Allowance for Loan Losses (Allowance) by an amount management felt
exceeded the amount necessary to absorb possible future loan losses.
Management subsequently reduced the Allowance balance to the amount necessary
to absorb possible future losses on the total loans outstanding at that time,
thus the resultant negative provision..
Excluding the bond claim settlement, the provision for loan losses actually
decreased $921 thousand, or 37%. The Corporation had net charge-offs of $1.1
million compared to net recoveries of $2.8 million for the first nine months
of 1993. Again, net recoveries in 1993 are primarily attributable to the
bond claim settlement. The allowance for loan losses was 1.70% of loans,
net of unearned income, at September 30, 1994, a small decline from 1.77% at
year end. Management feels the current reserve is adequate to cover any
potential future losses within the loan portfolio.
Noninterest Income
Noninterest income for the nine months ended September 30, 1994 totalled $8.6
million, an increase of $608 thousand, or 7.6%, from the first nine months
of 1993. In comparing the first nine months of 1994 to the same period in
1993, service charges decreased $261 thousand, or 8.0%, and trust fees
increased $73 thousand, or 10.1%. The corporation had $75 thousand in
investment losses during the first nine months of 1994 compared to a net
gain of $60 thousand during the same period in 1993. Other income for the
first nine months of 1994 increased $931 thousand from the same period of
1993, $611 thousand of this increase was due to the nonrecurring recovery.
Noninterest Expense
Noninterest expense for the first nine months of 1994 totalled $22.9 million an
increase of $733, or 3.3%. In comparing the first nine months of 1994 to the
same period in 1993, salary and employee benefits increased $526 thousand, or
4.7%, occupancy expense (net of rental income) increased $68 thousand, or
4.6%, FDIC insurance premiums decreased $56 thousand, or 4.7%, taxes on bank
shares increased $119 thousand, or 16.8%, and other real estate expenses (net)
increased $214 thousand. The increase in other real estate expense can be
primarily attributed to a decrease in rental income from other real estate.
Income Taxes
Income tax expense for the first nine months of 1994 decreased $1.0 million, or
26.5%. This decrease can be directly attributed to the decrease in income
before taxes. The 1994 effective rate is 30% compared to 32% in 1993.
The bond claim settlement caused the higher rate for 1993.
BALANCE SHEET REVIEW
Total assets were $839 million on September 30, 1994, an increase of $44
million or 5.6% from December 31, 1993. Assets averaged $839 million for the
first nine months of 1994, an increase of $25 million, or 3.1% from year
end 1993.
Loans
Loans, net of unearned income, increased $42 million, or 8.7% from December 31,
1993 to $524 million. On average loans, net of unearned income, represented
67.8% of average earning assets compared to 63.6% for 1993. The increase
can be attributed to growing loan demand from both the consumer and
commercial markets.
Temporary Investments
Federal funds sold and securities purchased under agreement to resell averaged
$57 million, a decrease of $19 million, or 25.0%, from year end 1993. The
funds are being used to fund loan growth.
Investment Securities
Investment securities were $184 million on September 30, 1994, a decrease of $5
million, or 2.5%, from year end 1993. Available for sale and held to maturity
securities were $67 and $117 million, respectively. Investment securities
averaged $178 million for the nine months ended September 30, 1994, an
increase of $7 million, or 4.1%, from year end 1993. Net unrealized losses
after tax on available for sale securities was $358 thousand on September 30,
1994.
Nonperforming assets
Other real estate owned decreased $835 thousand, or 71.4%, from year end 1993
to $334 thousand on September 30, 1994. Nonperforming assets totaled $9.6
million on September 30, 1994, an increase of $1.9 million from year end
1993. The chart below shows the change in nonperforming assets by type:
(In thousands)
September 30, December 31,
1994 1993
past due 90 days or more $2,184 $1,402
Non-accrual loans 3,474 1,565
Restructured loans 3,570 3,734
Other real estate owned 334 1,169
Total $9,562 $7,870
Nonperforming assets to total equity increased 142 basis points from year end
1993 to 9.69%. Nonperforming assets as a percentage of loans and other real
estate were 1.1% on September 30, 1994, a decrease of 50 basis points from
year end 1993. While in the past nine months total nonperforming assets have
increased, the performance over the past two years has been much better.
Since 1991, nonperforming assets have decreased $13 million and the percentage
of nonperforming assets to loans and other real estate has decreased 360 basis
points. This trend is a result of management's continued efforts to improve
the quality of the loan portfolio. The Corporation's loan policy includes
strict guidelines for approving and monitoring loans. These efforts have
resulted in the declining trend of nonperforming assets over the past four
years. Management will continue these same efforts in the future.
Deposits
Total deposits increased $41 million, or 6.2%, from year end 1993 to $699
million. Deposits averaged $699 million, an increase of $13 million from
year end 1993.
Borrowed Funds
Borrowed funds totaled $35 million, a decrease of $435 thousand from year end
1993. Borrowed funds averaged $37 million, an increase of $5 million, or
15.6%.
Shareholder's Equity
Shareholders equity was $98.6 million on September 30, 1994, increasing $3.6
million from year end 1993. Dividends of $3.5 million were declared during
the first nine months of 1994. The Corporation's capital ratios as of
September 30, 1994 and the regulatory minimums are as follows:
Farmers Capital Regulatory
Bank Corporation Minimum
Tier 1 risk based 16.35% 4.00%
Total risk based 17.60% 8.00%
Leverage 11.24% 3.00%
The capital ratios of all the subsidiary banks were in excess of the applicable
minimum regulatory capital ratio requirements at September 30, 1994.
Accounting Requirements
In May 1993, the FASB issued Statement of Financial Accounting Standards
No. 114, Accounting by Creditors for Impairment of a Loan ("SFAS 114"), which
addresses the accounting by creditors for impairment of a loan by specifying
how allowances for credit losses related to certain loans should be
determined. This Statement also addresses the accounting by creditors for
all loans that are restructured in a troubled debt restructuring involving a
modification of terms of a receivable.
An impaired loan shall be measured by the present value of expected future cash
flows discounted at the loan's effective interest rate, except that as a
practical expedient, at the loan's observable market price or the fair value
of the collateral if the loan is collateral dependent. If the measure of the
impaired loan is less than the recorded investment, an impairment will be
recognized by creating a valuation allowance with a corresponding charge to
bad debt expense. SFAS 114 will be effective for fiscal years beginning after
December 15, 1994. The impact on the financial statements is not known at
this time.
Liquidity
The liquidity of the Corporation is dependent on the receipt of dividends from
its subsidiary banks. Management expects that in the aggregate its
subsidiary banks will continue to have the ability to dividend adequate funds
to the Corporation during the remainder of 1994. The Corporation's objective
as it relates to liquidity is to insure that subsidiary banks have funds
available to meet deposit withdrawals and credit demands without unduly
penalizing profitability. In order to maintain a proper level of liquidity,
the banks have several sources of funds available on a daily basis which can
be used for liquidity purposes. These sources of funds are:
The bank's core deposits consisting of both business and
nonbusiness deposits
Cash flow generated by repayment of loan principal and interest
Federal funds
Liquidity projections are reviewed on a monthly basis and it is rare for a bank
to call on the third source of funds to meet liquidity requirements.
Generally, sources one and two are sufficient. For the longer term, the
liquidity position is managed by balancing the maturity structure of the
balance sheet. This process allows for an orderly flow of funds over an
extended period of time.
ITEM 4 - RESULTS OF VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held May 10, 1994.
The matters that were voted upon included:
A. The election of three directors for three-year terms ending 1997, or
until their successors have been elected and qualified.
B. The ratification of the appointment of Coopers & Lybrand as
independent accountants for the Corporation and its subsidiaries for
the calendar year 1994.
The outcome of the voting is as follows:
NAME FOR AGAINST WITHHELD ABSTAINED
Charles S. Boyd 3,405,590 200 460,592 0
Dr. John D. Sutterlin 3,405,690 100 460,592 0
Joseph C. Yagel, Jr. 3,402,685 3,105 460,592 0
Ratification of the
appointment of Coopers
& Lybrand 3,222,639 5,176 460,592 177,975
Listed below is the name of each director whose term of office continued after
the meeting:
Dr. John P. Stewart Warner U. Hines
Charles S. Boyd John J. Hopkins
E. Bruce Dungan Dr. John D. Sutterlin
William R. Sykes Joseph C. Yagel, Jr.
Michael M. Sullivan Charles O. Bush
In addition to the directors listed above, Frank Sower and Charles T. Mitchell
serve as Advisory Directors for the Corporation.
ITEM 5 - OTHER INFORMATION
On October 27, 1994, the Corporation announced an increase in their quarterly
dividend from thirty cents per share to thirty-three cents per share, which
represents an increase of 10%. Holders of record of the Corporation's stock
as of December 1, 1994 will be paid on January 1, 1995. The action to
increase the dividend was taken at the Board of Director's meeting on October
25, 1994.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K
On April 19, 1994, the Corporation filed a report on Form 8-K with the
Commission to report that they had recovered an additional $758,000 of
the losses incurred from an apparent scheme in 1990 to defraud First
Citizens Bank, Hardin County, a subsidiary of the Corporation. The
Corporation intends to pursue other related claims.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: 11-14-94 Charles S. Boyd
Charles Scott Boyd,
President and CEO
Date: 11-14-94 C. Douglas Carpenter
Cecil Douglas Carpenter
Vice President, Principal Financial
and Accounting Officer
