SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 2000
INTERCOUNTY BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
OHIO 0-23134 31-1004998
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(State or other jurisdiction (Commission File No.) (IRS Employer I.D. No.)
of incorporation)
48 N. South Street, Wilmington, Ohio 45177
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (937) 382-1441
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Item 5. Other Events.
In the last few days of the month of September, 2000, InterCounty
Bancshares, Inc. (Company), restructured a portion of its securities
portfolio and increased its provision for loan losses. Both of these
items will have a significant negative impact on Company third quarter
net income and year 2000 net income.
The restructuring of the securities portfolio involved the sale of
$38.0 million of long-term fixed-rate securities with a weighted average
life of 7.3 years and a weighted average yield of 6.27%, resulting in an
after-tax loss of $1.37 million. A portion of the proceeds of the sale,
$26.7 million, was reinvested in similar securities with a weighted average
life of 5.3 years and a weighted average yield of 7.33%. Another $10
million was used to purchase Bank Owned Life Insurance (BOLI) with a cash
surrender value that increases during the first year at a tax-equivalent
yield of 9.97% and increases during future years at an adjustable rate.
The restructuring is expected to increase pre-tax income by $542,000
in 2001 and continue to increase earnings in future years. Another
important result of the restructuring was to reduce the interest rate risk
of The National Bank and Trust Company (Bank), the Company's wholly owned
subsidiary, by shortening the weighted average maturity of the Bank's assets
and reducing the fixed rate assets with maturities over five years as a
percentage of total assets from 31.8% to 27.8%.
Additionally, the Bank has become aware of business problems being
experienced by a longstanding Bank customer. The customer has outstanding
loan balances with the Bank of approximately $6.1 million, $4.3 million of
which has an 80% guarantee by a U.S. Government agency. Repayment of the
portion of the $4.3 million loan that is not guaranteed and the other $1.8
million loan is uncertain. Although interest payments on the loans are
current, the Bank does not anticipate collecting all amounts due under the
contractual terms of the loan agreements. The Bank has recorded a $725,000
provision for loan losses in the third quarter, a portion of which has been
recorded in anticipation of potential losses on these loans. Due to the
early stage of this situation, the ultimate loss to the Bank, if any, cannot
be determined.
Partially offsetting the negative effects of the securities loss and
the additional provision for loan loss, certain performance related officer
bonus expense and retirement plan expense will be decreased by $500,000 for
2000, of which $350,000 was reduced in the third quarter.
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SIGNATURES
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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.
INTERCOUNTY BANCSHARES, INC.
By: \s\ Charles L. Dehner
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Charles L. Dehner
Executive Vice President,
Chief Financial Officer
Date: October 4, 2000
