F0RM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
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
O-19445
SHELBY COUNTY BANCORP
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-1832715
------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
29 East Washington Street
Shelbyville, Indiana 46176
------------------------------- ----------------------
(Address of principal executive (Zip Code)
office)
Registrant's telephone number, including area code:
(317) 398-9721
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 . No .
As of May 5, 1997, there were 175,950 shares of the Registrant's Common Stock
issued and outstanding.
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statements
of Financial Condition as of
March 31, 1997 (Unaudited)
and September 30, 1996. 3
Consolidated Statements
of Earnings for the three
months ended March 31, 1997
and 1996 (Unaudited) 4
Consolidated Statements of
Earnings for the six months
ended March 31, 1997 and
1996 (Unaudited) 5
Consolidated Statements of Cash Flows
for the six months ended
March 31, 1997 and 1996 (Unaudited) 6
Notes to Consolidated
Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II. OTHER INFORMATION 11
SIGNATURE PAGE 12
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1997 1996
----------- -----------
(Unaudited)
ASSETS
Cash $ 896,067 1,043,977
Interest-Bearing Deposits 4,915,849 3,879,299
Investment Securities Available
for Sale 7,285,823 7,243,756
Investment Securities Held to
Maturity (market value: $1,139,250
and $2,874,268) 1,124,399 1,267,448
Loans Receivable, Net 70,780,133
66,522,476
Accrued Interest Receivable on
Investment Securities 106,561 104,504
Stock of FHLB of Indianapolis 725,000 620,100
Premises and Equipment 1,822,395 1,874,702
Prepaid Expenses and Other Assets 138,966 119,353
----------- -----------
TOTAL ASSETS $87,795,193 82,675,615
LIABILITIES AND SHAREHOLDERS'
EQUITY
Liabilities:
Deposits $65,853,494 65,286,137
FHLB Advance and Other Borrowings 14,564,572 10,071,360
Accrued Interest on Deposits 130,870 133,492
Income Taxes Payable 267,280 225,237
Deferred Income Taxes 60,409 4,954
Accrued Expenses and Other
Liabilities 188,725 521,557
----------- -----------
TOTAL LIABILITIES $81,065,350 76,242,737
SHAREHOLDERS' EQUITY:
Common stock, without par value:
Shares authorized of 5,000,000;
Shares issued and outstanding of175,950 $ 1,358,123 1,358,123
Retained earnings-substantially
restricted 4,958,307 4,744,525
Unrealized Appreciation on
Investment Securities Available
for Sale 413,413 330,230
----------- -----------
TOTAL SHAREHOLDERS' EQUITY $ 6,729,843 6,432,878
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $87,795,193 82,675,615
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31,
-------------------------
1997 1996
Interest Income:
Loans Receivable $1,483,667 1,196,281
Mortgage-Backed Securities 65,019 79,485
Interest-Bearing Deposits 46,069 81,015
Investment Securities 58,936 57,835
Dividends from FHLB 14,033 8,142
---------- ----------
Total Interest Income 1,667,724 1,422,758
Interest Expense on FHLB Advances 243,091 -0-
Interest Expense on Deposits 766,848 834,216
---------- ----------
Total Interest Expense 1,009,939 834,216
---------- ----------
Net Interest Income 657,785 588,542
Provision for Loan Losses 27,000 15,000
---------- ----------
Net Interest Income After
Provision for Loan Losses 630,785 573,542
Non-Interest Income:
Service Charges and Fees 59,601 47,594
Other 23,254 55,033
---------- ----------
Total Non-Interest Income 82,855 102,627
---------- ----------
Non-Interest Expense:
Salaries and Employee Benefits 244,340 242,010
Premises and Equipment 64,958 68,797
Federal Deposit Insurance 8,944 40,851
Data Processing 61,457 59,631
Advertising 25,566 42,052
Bank Fees and Charges 23,029
18,420
Other 99,471 124,925
Total Non-Interest Expense 527,765 596,686
Earnings Before Income Taxes 185,875 79,483
Income Taxes 65,843 34,799
---------- ----------
NET EARNINGS $ 120,032 44,684
---------- ----------
EARNINGS PER SHARE $ .68 $ .25
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Six Months Ended
March 31,
--------------------------
1997 1996
Interest Income:
Loans Receivable $2,922,909 2,323,437
Mortgage-Backed Securities 135,498 163,820
Interest-Bearing Deposits 67,756 146,826
Investment Securities 117,812 89,810
Dividends from FHLB 26,269 16,395
========== ==========
Total Interest Income 3,270,244 2,740,288
Interest Expense on FHLB Advances 388,693 -0-
Interest Expense on Deposits 1,524,856 1,608,865
Total Interest Expense 1,913,549 1,608,865
Net Interest Income 1,356,695 1,131,423
Provision for Loan Losses 50,000 30,000
---------- ----------
Net Interest Income After
Provision for Loan Losses 1,306,695 1,101,423
Non-Interest Income:
Service Charges and Fees 119,341 117,205
Other 48,368 111,759
---------- ----------
Total Non-Interest Income 167,709 228,964
Non-Interest Expense:
Salaries and Employee Benefits 488,129 513,110
Premises and Equipment 130,175 128,295
Federal Deposit Insurance 35,214 82,093
Data Processing 121,961 116,481
Advertising 60,864 63,769
Bank Fees and Charges 45,793 31,767
Other 190,463 197,829
========== ==========
Total Non-Interest Expense 1,072,599 1,133,344
---------- ----------
Earnings Before Income Taxes 401,805 197,043
Income Taxes 152,845 89,619
---------- ----------
NET EARNINGS $ 248,960 107,424
---------- ----------
EARNINGS PER SHARE $ 1.41 $ .61
See accompanying notes to consolidated financial statements.
<PAGE>
SHELBY COUNTY BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------
1997 1996
----------- -----------
Cash Flows From Operating Activities:
<S> <C> <C>
Net Earnings $ 248,960 $ 107,424
Adjustments To Reconcile Net Earnings
To Net Cash Provided By Operating
Activities:
Depreciation and Amortization 78,467 44,339
Net Deferred Loan Origination Fees 7,214 (8,892)
Provision For Loan Losses 50,000 30,000
Gain on sale of Securities AFS 4,156 (28,445)
Increase (Decrease) in Accrued Int. Rec (2,057) (30,405)
(Increase) Decrease in Other Assets (19,613) 137,667
Increase (Decrease) in Other Liabilities (300,199) 365,503
----------- -----------
Net Cash Provided by Oper. Act 66,928 617,191
Cash Flows From Investing Activities:
Loans Funded Net of Collections (4,314,871) (6,192,889)
Principal Collected on Investment Sec 138,114 65,478
Principal Collected on AFS Securities 304,522 420,431
Purchase of Premises and Equipment (31,981) (24,094)
Purchase of Investment Securities -0- 1,405,545
Proceeds From Sale of Securities AFS 901,158 4,585,117
Purchase of Available for Sale Securities -0- (9,001,724)
Investment in FHLB Stock (104,900) -0-
Net Investment in Mtg.-Backed Sec. & Inv (1,123,663) -0-
Disposals of Premises & Equipment 21,154 -0-
----------- -----------
Net Cash Provided by (Used) in Invest. Act (4,210,467) (8,742,136)
Cash Flows from Financing Activities:
FHLB Advances 4,500,000 -0-
Dividends Paid (35,178) (17,535)
Net Increase in Deposits 567,357 7,971,514
Proceeds of Issuance of Common Stock -0- 17,250
Net Cash Provided by Financing
Activities 5,032,179 7,971,229
=========== ===========
Net Increase (Decrease) in Cash and
Cash Equivalents 888,640 (153,716)
Cash and Cash Equivalents at
Beginning of Period $ 4,923,276 7,241,682
=========== ===========
Cash and Cash Equivalents at End of Period $ 5,811,916 7,087,966
=========== ===========
Supplemental Cash Flow Information:
Interest Paid $ 1,536,393 $ 1,608,865
=========== ===========
Income Taxes Paid $ 100,000 $ 72,276
=========== ===========
Transfer From Investment Security
Portfolio to Available for Sale
Portfolio $ -0- $ 1,521,991
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Basis of Presentation
The consolidated financial statements include the accounts of Shelby County
Bancorp (the "Corporation") and its subsidiary Shelby County Savings Bank, FSB
(the "Bank"). A summary of significant accounting policies is set forth in Note
1 of Notes to Consolidated Financial Statements included in the September 30,
1996 Annual Report to Shareholders.
The consolidated interim financial statements have been prepared in accordance
with instructions to Form 10-Q, and therefore do not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles.
The consolidated interim financial statements at March 31, 1997 and for the
three months and six months ended March 31, 1997 and 1996 have not been audited
by independent accountants, but reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
such periods.
Note 2 Earnings per Share
Earnings per share are computed by dividing net earnings for the periods ended
March 31, 1997 and 1996 by the 175,950 shares of weighted average common stock
outstanding, respectively, during the period. The effects of outstanding stock
options are dilutive by less than 3%. Note 3 Stock Option Plan
The Corporation has adopted a stock option plan whereby 17,250 shares of
authorized but unissued common stock were reserved for future issuance upon the
exercise of stock options granted to key employees and directors at an option
price of $10 per share. Options for 12,075 shares at an option price of $10 per
share have been granted under the plan. Three thousand four hundred and fifty
shares of stock have been issued under the plan pursuant to those options as of
March 31, 1997. Options for 1,725 shares at an option price of $18 per share
have also been granted under the plan. Options for 3,450 shares at an option
price of $20 per share have also been granted under the plan.
Note 4 Dividends
On March 17, 1997, the Board of Directors declared a quarterly cash dividend of
$.10 per share. The dividend was paid April 15, 1997 to shareholders of record
as of March 31, 1997.
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition and
Results of Operations
(a) Financial Condition:
Total assets at March 31, 1997, were $87,795,000, an increase of
$5,119,000 from total assets of $82,676,000 at September 30, 1996. The
most significant increases in assets was in net loans receivable.Total
net loans receivable increased from $66,098,000 at September 30, 1996
to $70,780,000 at March 31, 1997. Mortgage loans increased from
$53,878,000 at September 30, 1996 to $58,161,000 at March 31, 1997.
Consumer loans decreased from $12,687,000 at September 30, 1996
to$12,593,000 at March 31, 1997. The increase in mortgage loans is
attributed to a very strong local economy and loan demand. The two
branches that were opened in 1995 have contributed over $4,739,000 in
mortgage and consumer lending. Interest bearing deposits increased from
$3,879,000 at September 30, 1996 to $4,916,000 at March 31, 1996.
Total deposits at September 30, 1996 of $65,286,000 increased to
$65,853,000 at March 31, 1997. This increase in deposits is primarily
due to an increase in demand deposit accounts. Non- performing assets
increased from $247,000 at September 30, 1996 to $453,000 at March 31,
1997. It is management's opinion that the bank's allowance for possible
loan losses is adequate to absorb any anticipated future losses from
loans at March 31, 1997.
(b) Results of Operations:
During the three month period ended March 31, 1997, net earnings
increased to $120,000 ($.68 per share) compared to net earnings of
$45,000 ($.25 per share) during the three month period ended March 31,
1996. The increase in earnings is primarily the result of an increase
in interest income on loans receivable in excess of the increase in
interest expense. Net interest income after provision for loan losses
was $631,000, for the three months ended March 31, 1996, compared to
$574,000 for the three months ended March 31, 1996. The interest rate
margin for the three months ended March 31, 1997 was 3.16%, compared to
3.36% for the same period one year ago. Interest income increased from
$1,423,000 for the three months ended March 31, 1996 to $1,668,000 for
the three months endedMarch 31, 1997. Interest expense for the three
month period ended March 31, 1997 was $1,010,000 compared to $834,000
for the three
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition and
Results of Operation
months ended March 31, 1996. This increase is primarily attributed to
the increase in interest expense on FHLB borrowings. Total non-interest
income was $83,000 for the three months ended March 31, 1997, compared
to $103,000 for the same period in 1996. The decrease was primarily due
to the closure of The Shelby Group, a wholly-owned subsidiary of the
Bank in November of 1996. Non- interest expense totaled $528,000 for
the quarter ended March 31, 1997 compared to $597,000 for the same
period in the prior year. The primary decrease in non-interest expense
relate to the reduction in the Federal Deposit Insurance Corporation's
premiums.
During the six month period ended March 31, 1997, net earnings
increased to $249,000 ($1.41 per share) compared to net earnings of
$107,000 ($.61 per share) during the six month period ended March 31,
1996. The increase in earnings is primarily the result of an increase
in interest income in excess of the increase in total interest expense.
Net interest income after provision for loan losses was $1,307,000 for
the six months ended March 31, 1997 compared to $1,101,000 for the six
months ended March 31, 1996. The interest rate margin for the six
months ended March 31, 1997 was 3.20%, compared to 3.05% for the same
period one year ago. The increase in the margin is primarily due to the
decrease in rates being paid on deposit accounts.
Interest income increased from $2,740,000 for the six months ended
March 31, 1996 to $3,270,000 for the six months ended March 31, 1997.
Interest expense for the six month period ended March 31, 1997 was
$1,914,000 compared to $1,609,000 for the six months ended March 31,
1996. This increase is primarily attributed to the increase in interest
expense on FHLB borrowings.
Total non-interest income was $168,000 for the six months ended March
31, 1997 compared to $229,000 for the same period in 1996. The decrease
was primarily due to the closure of The Shelby Group, Inc. by the Bank
in November of 1996.
Non-interest expense totaled $1,073,000 for the six months ended March
31, 1997 compared to $1,133,000 for the same period in the prior year.
The decrease in non-interest expense is due to cost cutting measures
related to salaries and employee benefits and the reduction of the
Federal Deposit Insurance Corporation insurance premiums.
(c) Capital Resources and Liquidity
The Corporation is subject to regulation as a savings and loan holding
company by the Office of Thrift Supervision ("OTS"). The Bank,as a
subsidiary of a savings and loan holding company, is subject to
<PAGE>
SHELBY COUNTY BANCORP AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition and
Results of Operation
certain restrictions in its dealings with the Corporation. The Bank is
subject to the regulatory requirements applicable to a federal savings
bank.
Current capital regulations require savings institutions to have
minimum tangible capital equal to 1.5% to total assets and a core
capital ratio equal to 3% of total assets. Additionally, savings
institutions are required to meet a risk-based capital ratio equal to
8.0% for risk-weighted assets. At March 31, 1997, the Bank satisfied
its capital requirements.
The following is a summary of the Bank's regulatory capital and capital
requirements at March 31, 1997 based on capital regulations currently
in effect for savings institutions.
Tangible Core Risk-based
Capital Capital Capital
Regulatory Capital $5,525,000 $5,525,000 $5,887,000
Minimum Capital Requirement 1,291,000 2,582,000 4,633,000
Excess Capital $4,234,000 $2,943,000 $1,254,000
Regulatory Capital Ratio 6.37% 6.37% 10.17%
Required Capital Ratio 1.50% 3.00% 8.00%
Liquidity measures the bank's ability to meet its savings withdrawals
and lending commitments. Management believes that the Bank's liquidity
is adequate to meet current requirements, such as the funding of
$2,122,000 in loan commitments as of March 31, 1997. The Bank maintains
liquidity of at least 5% of net withdrawable assets. At March 31, 1997,
its regulatory liquidity ratio was 13.96%.
<PAGE>
II. OTHER INFORMATION
Item 1. Legal Proceedings
The Bank is not engaged in any legal proceedings of a material
nature at the present time. From time to time, the Bank is a
party to legal proceedings wherein it enforces its security
interest in mortgage loans made by it.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith or
incorporated herein by reference:
Exhibit No.
3(1) The Articles of Incorporation of the Registrant are
incorporated herein by reference to Exhibit 3(1) to the
Registration Statement on Form S-1 (Registration No. 33-40540)
3(2) The Code of By-Laws of the Registrant are incorporated herein
by reference to Exhibit 3(2) to the Registration Statement of
Form S-1 (Registration No. 33-40540)
4 The Rights Agreement, dated as of April 17, 1995, between
Registrant and Bank One, Indianapolis, NA, as Rights Agent, is
incorporated herein by reference to Exhibit 2 to the
Registration Statement on Form 8-A (Registration No. 19445)
27 Financial Date Schedule
(b) Reports on 8-K--There were no reports on Form 8-K
filed during the three months ended March 31, 1997.
<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.
SHELBY COUNTY BANCORP
Date: May 5, 1997 By /s/ Rodney L. Meyerholtz
------------------------------------
Rodney L. Meyerholtz
President
Date: May 5, 1997 By /s/ Robert E. Thomas
------------------------------------
Robert E. Thomas
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000876621
<NAME> Shelby County Bancorp
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Sep-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 896,067
<INT-BEARING-DEPOSITS> 4,915,549
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,285,823
<INVESTMENTS-CARRYING> 1,124,399
<INVESTMENTS-MARKET> 1,139,250
<LOANS> 70,780,133
<ALLOWANCE> 362,251
<TOTAL-ASSETS> 87,795,193
<DEPOSITS> 65,853,494
<SHORT-TERM> 0
<LIABILITIES-OTHER> 647,284
<LONG-TERM> 14,564,572
0
0
<COMMON> 1,358,123
<OTHER-SE> 5,371,720
<TOTAL-LIABILITIES-AND-EQUITY> 87,795,193
<INTEREST-LOAN> 2,922,909
<INTEREST-INVEST> 321,066
<INTEREST-OTHER> 26,269
<INTEREST-TOTAL> 3,270,244
<INTEREST-DEPOSIT> 1,524,856
<INTEREST-EXPENSE> 1,913,549
<INTEREST-INCOME-NET> 1,356,695
<LOAN-LOSSES> 50,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,072,599
<INCOME-PRETAX> 401,805
<INCOME-PRE-EXTRAORDINARY> 248,960
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 248,960
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<YIELD-ACTUAL> 7.95
<LOANS-NON> 453,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 453,000
<ALLOWANCE-OPEN> 348,900
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 362,251
<ALLOWANCE-DOMESTIC> 362,251
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 362,251
</TABLE>
