UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 Number)
incorporation or organization)
P.O. Box 309, 202 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
3,777,620 shares outstanding at May 12, 1998
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information Page No.
- ------------------------------ --------
Item 1 - Financial Statements
Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 3
Unaudited Consolidated Statements of Income -
For the Three Months Ended
March 31, 1998 and March 31, 1997 4
Unaudited Consolidated Statements of Comprehensive Income -
For the Three Months Ended
March 31, 1998 and March 31, 1997 5
Unaudited Consolidated Statements of Cash Flows -
For the Three Months Ended
March 31, 1998 and March 31, 1997 6
Unaudited Consolidated Statements of Changes in Shareholders' Equity -
For the Three Months Ended
March 31, 1998 and March 31, 1997 7
Notes to Consolidated Financial Statements 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 13
Part II - Other Information
- ---------------------------
Item 6 - Exhibits and Reports on Form 8-K 13
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(In thousands, except share data) 1998 1997
- --------------------------------- ---- ----
ASSETS
Cash and cash equivalents:
Cash and due from banks $69,049 $75,830
Interest bearing deposits in other banks 2,084 1,300
Federal funds sold and securities purchased
under agreements to resell 49,925 109,610
------ -------
Total cash and cash equivalents 121,058 186,740
Investment securities:
Available for sale 117,300 119,076
Held to maturity 95,307 95,686
------ ------
Total investment securities 212,607 214,762
Loans, net of unearned income 575,889 585,940
Allowance for loan losses (9,132) (9,114)
------ ------
Loans, net 566,757 576,826
Premises and equipment 23,602 21,214
Accrued interest receivable 7,386 7,805
Other assets 7,203 6,836
----- -----
Total assets $938,613 $1,014,183
======== ==========
LIABILITIES
Deposits:
Noninterest bearing $125,182 $151,600
Interest bearing 642,669 683,376
------- -------
Total deposits 767,851 834,976
Other borrowed funds 43,352 53,655
Dividends payable 1,814 1,815
Accrued interest payable 2,119 1,956
Other liabilities 5,037 4,737
----- -----
Total liabilities 820,173 897,139
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock, par value $0.25 per share
4,804,000 shares authorized; 3,777,620
and 3,781,220 shares issued and
outstanding at March 31, 1998 and
December 31, 1997, respectively 944 945
Capital surplus 8,886 8,894
Retained earnings 108,667 107,105
Accumulated other comprehensive (loss) income (57) 100
--- ---
Total shareholders' equity 118,440 117,044
------- -------
Total liabilities and shareholders' equity $938,613 $1,014,183
======== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended March 31, 1998 1997
- ---------------------------- ---- ----
INTEREST INCOME
Interest and fees on loans $13,381 $12,906
Interest on investment securities:
Taxable 1,991 2,130
Nontaxable 766 769
Interest on deposits in other banks 53 19
Interest on federal funds sold and securities
purchased under agreements to resell 837 739
--- ---
Total interest income 17,028 16,563
INTEREST EXPENSE
Interest on deposits 6,675 6,565
Interest on other borrowed funds 497 303
--- ---
Total interest expense 7,172 6,868
----- -----
Net interest income 9,856 9,695
Provision for loan losses 232 568
--- ---
Net interest income after provision for loan losses 9,624 9,127
NONINTEREST INCOME
Service charges and fees on deposits 1,277 1,302
Other service charges, commissions, and fees 1,047 1,013
Data processing income 364 348
Trust income 298 271
Investment securities gains 100
Gain on sale of loans 5 4
Other 145 324
--- ---
Total noninterest income 3,236 3,262
NONINTEREST EXPENSE
Salaries and employee benefits 4,195 4,030
Occupancy expenses, net 499 483
Equipment expenses 669 695
Data processing expense 296 250
Bank franchise tax 264 211
Other 1,924 1,964
----- -----
Total noninterest expense 7,847 7,633
----- -----
Income before income taxes 5,013 4,756
Income tax expense 1,431 1,365
----- -----
Net income $3,582 $3,391
====== ======
NET INCOME PER COMMON SHARE
Basic $.95 $.89
Diluted .94 .89
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 3,780 3,795
Diluted 3,811 3,795
See accompanying notes to consolidated financial statements.
<PAGE>
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three months ended March 31, (In thousands) 1998 1997
- ------------------------------------------- ---- ----
NET INCOME $3,582 $3,391
Other comprehensive income:
Unrealized holding loss on available for
sale securities arising during the period,
net of tax of $45 and $96 in 1998 and 1997,
respectively (87) (187)
Reclassification adjustment for prior period
unrealized gain recognized during current
period, net of tax of $36 in 1998 (70)
---- ----
Net loss recognized in other comprehensive income (157) (187)
---- ----
COMPREHENSIVE INCOME $3,425 $3,204
====== ======
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, (In thousands) 1998 1997
- ------------------------------------------- ---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,582 $3,391
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 633 624
Net amortization of securities
premiums and discounts:
Available for sale (25) 10
Held to maturity 104 22
Provision for loan losses 232 568
Mortgage loans originated for sale (5,878) (3,653)
Proceeds from sale of mortgage loans 5,658 3,431
Deferred income tax benefit (1) (1)
Gain on sale of mortgage loans (5) (4)
Gain on sale of available for sale investment securities (100)
Decrease in accrued interest receivable 419 828
Increase in other assets (874) (996)
Increase (decrease) in accrued interest payable 163 (43)
Increase in other liabilities 754 84
--- --
Net cash provided by operating activities 4,662 4,261
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity or call of investment securities:
Available for sale 45,886 26,118
Held to maturity 7,084 11,932
Proceeds from sale of available for sale investment securities 25,394
Purchase of investment securities:
Available for sale (69,615) (34,832)
Held to maturity (6,809) (1,726)
Loans originated for investment, net of principal collected 10,062 6,492
Purchase of premises and equipment (2,888) (1,345)
Proceeds from sale of equipment 3
----- -----
Net cash provided by investing activities 9,114 6,642
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits (67,125) (19,280)
Dividends paid (1,815) (1,557)
Purchase of common stock (215) (322)
Net (decrease) increase in other borrowed funds (10,303) 16,095
------- ------
Net cash used in financing activities (79,458) (5,064)
------- ------
Net change in cash and cash equivalents (65,682) 5,839
Cash and cash equivalents at beginning of year 186,740 122,746
------- -------
Cash and cash equivalents at end of period $121,058 $128,585
======== ========
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest $7,009 $6,911
Income taxes 189
Cash dividend declared and unpaid 1,814 1,556
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Accumulated
Other Total
(In thousands, except per share data) Common Stock Capital Retained Comprehensive Shareholders'
Three months ended March 31, 1998 and 1997 Shares Amount Surplus Earnings Income Equity
- ------------------------------------------ ------ ------ ------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 3,797 $ 949 $ 8,931 $ 100,078 $ (362) $ 109,596
Cash dividends declared, $.41 per share (1,556) (1,556)
Purchase of common stock (8) (2) (18) (301) (321)
Comprehensive income:
Net income 3,391 3,391
Other comprehensive income, net of tax:
Unrealized gain on available for sale securities,
net of reclassification adjustment (187) (187)
--------
Comprehensive income 3,204
------ ------ ------- -------- ------ --------
Balance at March 31, 1997 3,789 $ 947 $ 8,913 $ 101,612 $ (549) $ 110,923
===== ========= ======== ========= ======== =========
Balance at December 31, 1997 3,781 $ 945 $ 8,894 $ 107,105 $ 100 $ 117,044
Cash dividends declared, $.48 per share (1,814) (1,814)
Purchase of common stock (3) (1) (8) (206) (215)
Comprehensive income:
Net income 3,582 3,582
Other comprehensive income, net of tax:
Unrealized loss on available for sale securities,
net of reclassification adjustment (157) (157)
--------
Comprehensive income 3,425
------ ------ ------- -------- ------ --------
Balance at March 31, 1998 3,778 $ 944 $ 8,886 $ 108,667 $ (57) $ 118,440
===== ========= ======== ========= ======== =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Farmers Capital
Bank Corporation (the "Company"), a bank holding company, and its subsidiaries,
including its principal subsidiary, Farmers Bank & Capital Trust Company. All
significant intercompany transactions and accounts have been eliminated in
consolidation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Estimates used in the preparation of the financial statements are based on
various factors including the current interest rate environment and the general
strength of the local economy. Changes in the overall interest rate environment
can significantly affect the Company's net interest income and the value of its
recorded assets and liabilities. Actual results could differ from those
estimates used in the preparation of the financial statements.
The financial information presented as of any date other than December 31 has
been prepared from the books and records without audit. The accompanying
consolidated financial statements have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include
all of the information and the footnotes required by generally accepted
accounting principles for complete statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of such financial statements, have been included. The results of
operations for the interim periods are not necessarily indicative of the results
to be expected for the full year.
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, 1997.
2. RECLASSIFICATIONS
Certain reclassifications have been made to the consolidated financial
statements of prior periods to conform to the current period presentation. These
reclassifications do not affect net income or shareholders' equity as previously
reported.
3. ADOPTION OF NEW ACCOUNTING PRINCIPLES
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 130, REPORTING COMPREHENSIVE INCOME and SFAS No. 131,
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION.
SFAS 130 establishes standards for reporting and display of comprehensive income
and its components. Comprehensive income is defined as the change in equity (net
assets) of a business enterprise during a period from transactions and other
events and circumstances from nonowner sources. For the Company, this includes
net income and unrealized gains and losses on available for sale investment
securities. This Statement requires comprehensive income to be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The implementation of SFAS 130 did not have a material
impact on the Company's consolidated financial statements.
SFAS 131 changes the way public companies report information about segments of
their business in their annual financial statements and requires them to report
selected segment information in their quarterly report to shareholders. This
Statement requires that companies disclose segment data based on how management
makes decisions about allocating resources to segments and measuring their
performance. This Statement is effective in 1998. In the initial year of
application, this Statement is not required to be applied to interim periods.
The Company does not expect the implementation of this Statement to have a
material effect on the consolidated financial statements.
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
First Quarter 1998 vs. First Quarter 1997
-----------------------------------------
The Company reported earnings of $3.6 million, or $.94 per diluted share, for
the first quarter of 1998 compared to earnings of $3.4 million, or $.89 per
diluted share for the first quarter of 1997.
Return on average assets was 1.55% for the first quarter of 1998, compared to
1.51% reported for the same period of 1997. Return on average equity was 12.39%
for the first quarter of 1998, a decrease from 12.48% during the same period of
1997.
Net Interest Income
- -------------------
Net interest income totaled $9.9 million for the first quarter of 1998 compared
to $9.7 million for the first quarter 1997. Interest and fees on loans increased
$475 thousand or 3.7%, which is primarily attributable to an increase in volume.
Interest on taxable securities decreased $139 thousand, or 6.5% and interest on
nontaxable securities decreased $3 thousand, or less than 1%. Interest on short
term investments increased $132 thousand, or 9.7%.
Interest expense on deposits increased $110 thousand, or 1.7% due to a slight
increase in the rates paid. Interest on short term borrowings increased $194
thousand due to an increase in volume.
The net interest margin (net interest income as a percentage of average earning
assets), on a tax equivalent basis, decreased to 4.82% during the first quarter
of 1998 compared to 4.94% in the first quarter of 1997. The spread between rates
earned and paid decreased to 3.99% compared to 4.20% in the first quarter of
1997.
Noninterest Income
- ------------------
Noninterest income of $3.2 million remained relatively unchanged from the first
quarter of 1997. Service charges and fees on deposits of $1.3 million decreased
$25 thousand, or 1.9% from the first quarter of 1997. Other service charges,
commissions, and fees increased $34 thousand, or 3.4% to $1.0 million from the
first quarter of 1997. Data processing income increased 4.6% to $364 thousand
for the first quarter of 1998. Trust fees increased $27 thousand, or 10% to $298
thousand. The Company recorded gains on the sale of investment securities
available for sale of $100 thousand during the first quarter of 1998. Other
noninterest income decreased $179 thousand in 1998 compared to 1997. This is
primarily attributed to a recovery of prior year legal expenses of $189
thousand.
<PAGE>
Noninterest Expense
- -------------------
Total noninterest expenses increased $214 thousand or 2.8% from the first
quarter of 1997 to $7.8 million. Salaries and employee benefits, the largest
component of noninterest expense, increased $165 thousand, or 4.1%. Occupancy
expense, net of rental income, increased $16 thousand to $499 thousand. These
increases are partially attributed to the Company's efforts to expand into new
markets. Equipment expenses decreased $26 thousand, or 3.7%. Data processing
expense increased 18.4% from $250 thousand to $296 thousand for the first
quarter of 1998. Bank franchise taxes increased $53 thousand to $264 thousand.
Other noninterest expenses decreased 2.0% to $1.9 million for the quarter ended
March 31, 1998.
Income taxes
- ------------
Income tax expense for the quarter ended March 31, 1998 was $1.4 million,
relatively unchanged from the first quarter of 1997. The first quarter 1998
effective tax rate was 28.6%, relatively unchanged from the first quarter of
1997.
FINANCIAL CONDITION
Total assets were $939 million on March 31, 1998, a decrease of 7.5% from
December 31, 1997. The fluctuation in total assets is primarily due to the
relationship between the Company's lead bank, Farmers Bank & Capital Trust Co.
and the Commonwealth of Kentucky. Farmers Bank is the depository for the
Commonwealth of Kentucky in Frankfort. As such, large fluctuations in deposits
are likely to occur on a daily basis. On December 31, 1997, Farmers Bank held a
significant amount of deposits for the Commonwealth, which were subsequently
reduced shortly after year end. Assets averaged $936 million for the first
quarter of 1998, an increase of $30 million, or 3.3% from year end 1997.
Loans
- -----
Loans, net of unearned income, decreased $10.1 million, or 1.7% from December
31, 1997 to $576 million. On average, loans represented 68.4% of earning assets
compared to 69.5% for year end 1997. As loan demand fluctuates, the available
funds are redirected between either temporary investments or investment
securities.
Allowance for Loan Losses
- -------------------------
The provision for loan losses decreased $336 thousand or 59.2% compared to the
first quarter 1997. The Company had net charge-offs of $215 thousand in the
first quarter of 1998 compared to net charge-offs of $846 thousand in the same
period of 1997. The allowance for loan losses was 1.59% of net loans in the
first quarter of 1998, an increase of 3 basis points from year end 1997.
Management continues to emphasize collection efforts and evaluation of risks
within the portfolio.
Nonperforming assets
- --------------------
Nonperforming assets, consisting of nonaccrual loans, restructured loans, loans
past due ninety days or more on which interest in still accruing, other real
estate owned, and other foreclosed assets, totaled $7.7 million on March 31,
1998, an increase of $1.1 million or 16.4% from year end 1997. Nonperforming
assets to total equity increased from 5.7% at year end 1997 to 6.5% at March 31,
1998. Nonperforming loans as a percentage of net loans increased from 1.13% at
year end to 1.20%.
Other real estate owned which had a balance of $29 thousand at year end 1997,
increased to $138 thousand as of March 31, 1998.
Temporary Investments
- ---------------------
Time deposits with banks, federal funds sold and securities purchased under
agreements to resell averaged $64.0 million, an increase of $16.3 million, or
31.1% from year end 1997.
Investment Securities
- ---------------------
Investment securities were $213 million on March 31, 1998, a decrease of $2.2
million, or 1.0% from year end 1997. Available for sale and held to maturity
securities were $117 and $96 million, respectively. Investment securities
averaged $204 million for the first quarter of 1998, a decrease of $5.4 million,
or 2.6% from year end 1997. The Company had a net unrealized loss on securities
available for sale, net of taxes, of $57 thousand on March 31, 1998, as compared
to a net unrealized gain of $100 thousand on December 31, 1997.
Deposits
- --------
Total deposits decreased $67 million, or 8.0%, from year end 1997 to $768
million. As previously discussed, this fluctuation is primarily due to the
relationship between the Company's lead bank and the Commonwealth of Kentucky.
Deposits averaged $772 million, an increase of $18.6 million, or 2.5% from year
end 1997.
Borrowed Funds
- --------------
Borrowed funds totaled $43.4 million, a decrease of $10.3 million, or 19.2% from
year end 1997. This decrease is due primarily to repurchase agreements entered
into with the Commonwealth of Kentucky. The fluctuations are due to the
relationship with the Commonwealth of Kentucky as described in preceding
sections of this report. Borrowed funds averaged $36 million, an increase of
$4.9 million, or 15.6%.
LIQUIDITY
The liquidity of the Company 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 Company
during the remainder of 1998.
The Company'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:
1. The banks' core deposits consisting of both business and nonbusiness deposits
2. Cash flow generated by repayment of loan principal and interest
3. Federal funds purchased and securities sold under agreements to repurchase
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.
Liquid assets consist of cash and due from banks, short-term investments, and
securities available for sale. At March 31, 1998, such assets totaled $238
million, a decrease of $67 million from year end 1997. The decrease in liquid
assets was primarily due to the decrease of the balances maintained by the
Commonwealth of Kentucky. Fluctuations such as this are normal and are
anticipated by Management in analyzing the Company's ongoing liquidity and
funding needs.
CAPITAL RESOURCES
Shareholders' equity was $118 million on March 31, 1998, increasing $1.4 million
from year end 1997. The Company purchased 3,600 shares of its outstanding common
stock during the first quarter of 1998 for a total cost of $215 thousand.
Dividends of $1.8 million, or $.48 per share, were declared during the first
quarter of 1998, an increase of 17.1% per share compared to the first quarter of
1997.
Consistent with the objective of operating a sound financial organization, the
Company's goal is to maintain capital ratios well above the regulatory
requirements. The Company's capital ratios as of March 31, 1998, the regulatory
minimums and the regulatory standard for a "well capitalized" institution are as
follows:
Farmers Capital Regulatory Well
Bank Corporation Minimum Capitalized
---------------- ------- -----------
Tier 1 risk based 19.23% 4.00% 6.00%
Total risk based 20.48% 8.00% 10.00%
Leverage 12.50% 4.00% 5.00%
The capital ratios of all the subsidiary banks, on an individual basis, were in
excess of the applicable minimum regulatory capital ratio requirements at March
31, 1998.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Year 2000 problem
arises when computer programs use two digits rather than four to define the
applicable year. Some systems may treat the year 2000 as the year 1900. This
could result in a major system failure or miscalculations. A number of computer
systems which are affected by the Year 2000 are utilized by the Company to
operate its day-to-day business. Most of these systems use software developed by
and licensed from third party software vendors.
The Company is utilizing both internal and external resources to identify,
correct and test the Company's systems for Year 2000 compliance. The Company is
actively managing all of its third party software vendors to determine that
software corrections and warranty commitments are obtained. The Company believes
that mission critical applications are Year 2000 compliant. Most of the systems
testing will be completed in 1998, with the remainder scheduled to be completed
during the first quarter of 1999. The Company believes that the costs associated
with Year 2000 compliance will be absorbed in routine annual software
maintenance contracts and are not likely to be incremental costs to the Company.
The Company does not anticipate future material expenditures in order to become
Year 2000 compliant.
EFFECT OF IMPLEMENTING RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
EMPLOYERS' DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS. This
Statement revises employers' disclosures about pension and other postretirement
benefit plans. It does not change the measurement or recognition of those plans.
It standardizes the disclosure requirements for pensions and other
postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain disclosures
required in SFAS No. 87, SFAS No. 88 and SFAS No. 106.
This Statement is effective for fiscal years beginning after December 15, 1997,
and requires restatement of disclosures in earlier periods. The Company does not
expect the implementation of this Statement to have a material effect on the
consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements under the Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. Although the
Company believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included herein will prove to be accurate. Factors that could cause actual
results to differ from the results discussed in the forward-looking statements
include, but are not limited to: economic conditions (both generally and more
specifically in the markets in which the Company and its subsidiaries operate);
competition for the Company's customers from other providers of financial
services; government legislation and regulation (which changes from time to time
and over which the Company has no control); changes in interest rates; material
unforeseen changes in the liquidity, results of operations, or financial
condition of the Company's customers; and other risks detailed in the Company's
filings with the Securities and Exchange Commission, all of which are difficult
to predict and many of which are beyond the control of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company's market risk from December
31, 1997. For information regarding the Company's market risk, refer to the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) List of Exhibits
----------------
11 Statement re computation of per share earnings
27 Financial data schedule (for SEC use only)
b) Reports on Form 8-K
-------------------
On January 30, 1998 the Company filed a report on Form 8-K pursuant to
Item 5 of that form. The Company's Board of Directors approved a
two-for-one split of its common stock in order to make its shares more
accessible to potential buyers. The split, which is subject to shareholder
approval, is effective July 1, 1998 for holders of record on June 1, 1998.
No financial statements were filed as a part of that form.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: 5/15/98 /s/ Charles S. Boyd
-------- -------------------
Charles Scott Boyd,
President and CEO (Principal Executive Officer)
Date: 5/15/98 /s/ C. Douglas Carpenter
-------- ------------------------
Cecil Douglas Carpenter
Vice President and CFO (Principal Financial
and Accounting Officer)
<PAGE>
Exhibit 11
Statement re computation of per share earnings
----------------------------------------------
(In thousands, except per share data)
Three months ended March 31, 1998 1997
- ---------------------------- ---- ----
Net income, basic and diluted $ 3,582 $ 3,391
========== =========
Average shares outstanding 3,780 3,795
Effect of dilutive stock options 31
----- -----
Average diluted shares outstanding 3,811 3,795
===== =====
Net income per share, basic $ .95 $ .89
Net income per share, diluted .94 .89
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the March
31, 1998 financial statements and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 69049
<INT-BEARING-DEPOSITS> 2084
<FED-FUNDS-SOLD> 49925
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 117300
<INVESTMENTS-CARRYING> 95307
<INVESTMENTS-MARKET> 95915
<LOANS> 575889
<ALLOWANCE> 9132
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0
0
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</TABLE>
