<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 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 0-26242
FORT THOMAS FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 61-1278396
- ---------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25 North Fort Thomas Avenue
Fort Thomas, Kentucky 41075
- --------------------------------------- -----------------------------
(Address of principal executive office) (Zip Code)
(606) 441-3302
----------------------------------------------------
(Registrant's telephone number, including area code)
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: As of May 12, 1997, there
were issued and outstanding 1,415,558 shares of the Registrant's Common
Stock, par value $.01 per share.
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FORT THOMAS FINANCIAL CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
Part I. Financial Information
---------------------
Item 1. Consolidated Financial Statements
Consolidated Statement of Financial Condition (As of
September 30, 1996 and March 31, 1997 (unaudited)) 1
Consolidated Statements of Income for the three and
six months ended March 31, 1997 (unaudited) and 1996
(unaudited) 2
Consolidated Statements of Cash Flows for the six
months ended March 31, 1997 (unaudited) and 1996
(unaudited) 3
Notes to Unaudited Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II. Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
</TABLE>
SIGNATURES
<PAGE>
FORT THOMAS FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
----------- -------------
<S> <C> <C>
(IN THOUSANDS)
Assets
Cash.............................................................. $ 1,666 $ 1,785
Investment Securities:
Held to maturity--at amortized cost.............................. 3,495 3,503
Available for sale--at market value.............................. 985 494
Mortgage-backed securities--available for sale.................... 785 816
Loans Receivable, net............................................. 84,231 77,987
Office Properties and equipment--at depreciated cost.............. 606 643
Real Estate Owned................................................. -- --
Federal Home Loan Bank Stock (FHLB)--at cost...................... 724 700
Cash Surrender Value of Life Insurance............................ 1,092 1,068
Accrued Interest Receivable....................................... 729 642
Prepaid and Other Assets.......................................... 99 118
Federal Income Tax Receivable..................................... 269 257
----------- -------------
Total Assets.................................................... $ 94,681 $ 88,013
----------- -------------
----------- -------------
Liabilities
Savings Accounts................................................... $ 68,515 $ 63,731
Borrowed funds..................................................... 9,701 6,754
Advances from Borrowers for Taxes and Insurance.................... 99 188
Deferred Compensation.............................................. 438 376
Accrued Interest Payable........................................... 60 60
Accrued Federal Income Taxes....................................... 160 85
Deferred Federal Income Taxes...................................... -- --
Other Liabilities.................................................. 472 887
Deferred Income.................................................... -- 11
----------- -------------
Total Liabilities................................................. 79,445 72,092
----------- -------------
Stockholders' Equity
Common Stock, $.01 par value; 4,000,000 shares authorized;
1,415,558 shares issued and 1,498,884 outstanding................ 16 16
Additional Paid-in Capital........................................ 9,421 9,387
Unearned ESOP Shares.............................................. (795) (847)
MRP Trust......................................................... (734) (793)
Retained Earnings, Substantially Restricted....................... 8,459 8,165
Treasury Stock.................................................... (1,103) --
Unrealized Gain on Investment
Securities........................................................ (28) (7)
----------- -------------
Total Stockholders' Equity....................................... 15,236 15,921
----------- -------------
Total Liabilities and Stockholders' Equity....................... $ 94,681 $ 88,013
----------- -------------
----------- -------------
</TABLE>
1
<PAGE>
FORT THOMAS FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
Interest Income
Interest on loans.......................................................... $ 1,824 $ 1,653 $ 3,591 $ 3,242
Interest on investment securities.......................................... 64 91 129 180
Interest on mortgage-backed securities..................................... 13 14 23 28
Other interest and dividends............................................... 44 90 90 188
--------- --------- --------- ---------
Total interest income.................................................... 1,945 1,848 3,833 3,638
--------- --------- --------- ---------
Interest Expense
Deposits................................................................... 880 820 1,728 1,657
Borrowed funds............................................................. 132 48 248 98
--------- --------- --------- ---------
Total interest expense................................................... 1,012 868 1,976 1,755
--------- --------- --------- ---------
Net interest income........................................................ 933 980 1,857 1,883
Provision for loan losses.................................................. 101 61 113 66
--------- --------- --------- ---------
Net interest income after provision for loan losses........................ 832 919 1,744 1,817
--------- --------- --------- ---------
Other Income
Fees and charges.......................................................... 33 16 56 28
Other..................................................................... 11 23 37 43
--------- --------- --------- ---------
Total other income....................................................... 44 39 93 71
--------- --------- --------- ---------
Other Expenses
Salaries and employee benefits............................................ 262 285 566 487
Franchise and other taxes................................................. 30 30 60 55
Federal insurance premium................................................. 11 33 48 66
Expenses of premises and fixed assets..................................... 42 48 86 83
Data processing and other related contract services....................... 41 41 71 66
Other operating expense................................................... 150 203 295 331
--------- --------- --------- ---------
Total expenses.......................................................... 536 640 1,126 1,088
--------- --------- --------- ---------
Income before income tax................................................... 340 318 711 801
Federal income tax expense................................................. 116 91 227 247
--------- --------- --------- ---------
Net income................................................................ $ 224 $ 227 $ 484 $ 554
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per share......................................................... $ .15 $ .16 $ .33 $ .38
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
2
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FORT THOMAS FINANCIAL CORPORATION AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
--------------------
<S> <C> <C>
1997 1996
--------- ---------
(IN THOUSANDS)
Cash Flows From Operating Activities
Net income................................................................. 484 554
Reconciliation of net income with cash flows from operations:.............. 113 66
Allowance for losses on mortgages.......................................... 40 48
Depreciation............................................................... (13) (22)
Deferred income taxes...................................................... (137) 4
Amortization............................................................... (24) (27)
FHLB stock dividends....................................................... 93 85
Changes in
Accrued interest receivable............................................... (87) (63)
Prepaid and other assets................................................... 18 (6)
Cash surrender value of life insurance..................................... (23) (31)
Deferred compensation...................................................... 63 55
Accrued interest payable................................................... (1) 2
Accrued income tax......................................................... 75 (50)
Other liabilities.......................................................... (426) (16)
--------- ---------
Net Cash Provided by Operating Activities................................ 175 599
--------- ---------
Cash Flows From Investing Activities
Purchase of investment securities.......................................... (1,491) (2,502)
Maturity of investment securities.......................................... 1,000 1,500
Loan originations and repayments, net...................................... (6,222) (2,208)
Principal received on mortgage-backed security............................. 19 65
Proceeds from sale of REO.................................................. 0 71
Purchase of office properties and equipment................................ (2) (8)
Net Cash Used by Investing Activities.................................... (6,696) (3,081)
Cash Flows From Financing Activities
Net increase in savings accounts........................................... 4,784 2,386
Dividends paid............................................................. (190) (197)
ESOP Shares released....................................................... 52 0
Common Stock shares purchased for treasury................................. (1,102) (873)
Advance from borrowers for taxes and insurance............................. (89) (110)
Advances from FHLB......................................................... 2,847 --
Repayments of borrowed funds............................................... 100 (97)
Net cash provided by financing activities................................ 6,402 1,109
--------- ---------
Changes in cash and cash equivalents..................................... (119) (1,373)
Cash and cash equivalents, beginning of period........................... 1,785 6,032
--------- ---------
Cash and cash equivalents, end of period................................. $ 1,666 $ 4,659
--------- ---------
--------- ---------
</TABLE>
3
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FORT THOMAS FINANCIAL CORPORATION
AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION
Fort Thomas Financial Corporation (the "Corporation") was incorporated
under Ohio law in March 1995 by Fort Thomas Federal Savings and Loan
Association (the "Association") in connection with the conversion of the
Association from a federally chartered mutual savings and loan association
to a federally chartered stock savings bank, known as Fort Thomas Savings
Bank, F.S.B. (the "Bank"), the issuance of the Bank's stock to the
Corporation and the offer and sale of the Corporation's common stock by the
Corporation (the "Conversion"). Upon consummation of the Conversion on
June 27, 1995, the Corporation became the unitary holding company for the
Bank.
The accompanying unaudited consolidated financial statements of
the Corporation have been prepared in accordance with instructions
to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. However, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the three and six months ended
March 31, 1997 are not necessarily indicative of the results to be
expected for the year ending September 30, 1997. The unaudited
consolidated financial statements and notes thereto should be read
in conjunction with the audited financial statements and notes
thereto for the year ended September 30, 1996 contained in the
Corporation's 1996 Annual Report.
NOTE 2--EARNINGS PER SHARE
The earnings per share amount for the three and six months
ended March 31, 1997 and 1996 is based upon the average outstanding
shares of the Corporation reduced by the unreleased shares of the
Corporation's Employee Stock Ownership Plan. The number of shares
used in this calculation was 1,457,156 and 1,465,083, respectively for
the three and six months ended March 31, 1997 and 1,456,052 and 1,454,025,
respectively, for the three and six months ended March 31, 1996.
4
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At March 31, 1997, the Corporation's assets amounted to $94.7 million as
compared to $88.0 million at September 30, 1996. The $6.7 million or 7.6%
increase was primarily due to an increase in loans receivable, net. Such
increase was funded primarily by an increase in deposits and borrowed funds.
Stockholders' equity decreased $685,000 to $15.2 million or 16.1% of total
assets at March 31, 1997 compared to $15.9 million or 18.1% at September 30,
1996. The decrease in stockholders' equity was due to the repurchase of
shares of common stock as treasury shares.
ASSET QUALITY
Loans are placed on nonaccrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. When a loan is placed on nonaccrual
status, previously accrued but unpaid interest is deducted from interest
income. The Bank does not accrue interest on real estate loans past due 90
days or more. Loans may be reinstated to accrual status when all payments are
brought current and, in the opinion of management, collection of the
remaining balance can be reasonably expected.
Real estate acquired by the Bank as a result of foreclosure or by
deed-in-lieu of foreclosure is classified as other real estate owned until
sold. Pursuant to a statement of position ("SOP 92-3") issued by the American
Institute of Certified Public Accountants in April 1992, which provides
guidance on determining the balance sheet treatment of foreclosed assets in
annual financial statements for periods ending on or after December 15, 1992,
there is a rebuttable presumption that foreclosed assets are held for sale
and such assets are recommended to be carried at the lower of fair value
minus estimated costs to sell the property, or cost (generally the balance of
the loan on the property at the date of acquisition). After the date of
acquisition, all costs incurred in maintaining the property are expenses and
costs incurred for the improvement or development of such property are
capitalized up to the extent of their net realizable value. The Bank's
accounting for its real estate acquired by foreclosure complies with the
guidance set forth in SOP 92-3.
Under general accepted accounting principles, the Bank is required to
account for certain loan modifications or restructuring as "troubled debt
restructurings." In general, the modification or restructuring of a debt
constitutes a troubled debt restructuring if the Bank for economic or legal
reasons related to the borrower's financial difficulties grants a concession
to the borrower that the Bank would not otherwise consider. Debt
restructurings or loan modifications for a borrower do not necessarily always
constitute troubled debt restructurings, however, and troubled debt
restructurings do not necessarily result in
5
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nonaccrual loans. The Bank did not have any troubled debt restructurings as
of March 31, 1997.
DELINQUENT LOANS
The following table sets forth information concerning delinquent loans in
dollar amounts and as a percentage of each category of the Bank's loan
portfolio at March 31, 1997. The amounts presented represent the total
outstanding principal balances of the related loans, rather than the actual
payment amounts which are past due.
<TABLE>
<CAPTION>
PERCENT OF CORRESPONDING
LOANS DELINQUENT FOR LOAN CATEGORIES
--------------------------------- -------------------------------------------
90 DAYS
30-89 90 DAYS 30-89 AND
DAYS AND OVER TOTAL DAYS OVER TOTAL
--------- ----------- --------- ----- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
One- to four-family residential.............. $ 2,455 $ 1,623 $ 4,078 3.59% 2.37% 5.96%
Multi-family and non-residential............. -- 54 54 -- 0.46 0.46
Construction and land........................ 535 207 742 9.67 3.73 13.37
Consumer..................................... 2 32 34 0.16 2.62 2.78
--------- ----------- ---------
Total delinquent loans....................... $ 2,992 $ 1,916 $ 4,908
--------- ----------- ---------
--------- ----------- ---------
</TABLE>
6
<PAGE>
The following table sets forth the amounts and categories of the Bank's
non-performing assets at the dates indicated.
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
-------------------- -------------
1997 1996 1996
--------- --------- -------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Non-accruing loans:
One- to four-family residential (1)............................................ $ 1,562 $ 1,215 $ 917
Multi-family and non-residential real estate................................... 54 113 56
Construction and land.......................................................... 207 203 90
Consumer....................................................................... -- 3 117
Accruing consumer loans greater than 90 days delinquent:....................... 93 -- --
-------- ------ ------
Total non-performing loans................................................... 1,916 1,534 1,180
-------- ------ ------
Real estate acquired through foreclosure........................................ -- 33 --
--------- --------- ------
Total non-performing assets.................................................. $ 1,916 $ 1,567 $ 1,180
--------- --------- ------
--------- --------- ------
Total non-performing assets as a percentage of total net loans............... 2.20% 2.10% 1.51%
--------- --------- ------
--------- --------- ------
Total non-performing assets as a percentage of total assets.................. 2.02% 1.73% 1.34%
--------- --------- ------
--------- --------- ------
</TABLE>
- ------------------------
(1) Includes second mortgage loans.
The $1.9 million of nonaccruing loans at March 31, 1997 consisted of
44 loans with an average balance of approximately $43,000. Interest that
would have been earned on these loans, if they had been accounted for on an
accruing basis during the six month period
7
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would have been approximately $40,000. Substantially all of the loans are
extended to separate borrowers.
CLASSIFIED ASSETS
Federal regulations require that each insured savings association
classify its assets on a regular basis. In addition, in connection with
examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard", "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized
by the distinct possibility that the insured institution will sustain some
loss if the deficiencies are not corrected. Doubtful assets have the
weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
possibility of loss. An asset classified loss is considered uncollectible and
of such little value that continuance as an asset of the institution is not
warranted. At March 31, 1997, the Bank had $2.9 million of loans which
were classified as substandard, $20,000 of loans classified as doubtful and
$33,000 of loans classified as loss.
ALLOWANCE FOR LOAN LOSSES
It is management's policy to maintain an allowance for estimated losses
based on the perceived risk of loss in the loan portfolio. In assessing risk,
management considers historical loss experience, the volume and type of
lending conducted by the Bank, industry standards, past due loans, general
economic conditions and other factors related to the collectibility of the
loan portfolio. The allowance is increased by provisions for loan losses
which are charged against income.
Although management uses the best information available to make
determinations with respect to the provisions for loan losses, additional
provisions for loan losses may be required to be established in the future
should economic or other conditions change substantially. In addition, the
OTS and the FDIC, as an integral part of their examination process,
periodically review the Bank's allowance for possible loan losses. Such
agencies may require the Bank to recognize additions to such allowance based
on their judgments about information available to them at the time of their
examination.
8
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The following table summarizes changes in the allowance for loan losses
and other selected statistics for the periods presented.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
-------------------- --------------
1997 1996 1996
--------- --------- -------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Average loans receivable, net................................................ $ 82,482 $ 73,029 $ 73,875
--------- --------- -------------
--------- --------- -------------
Allowance for loan losses
Balance at beginning of period............................................... $ 366 $ 245 $ 239
Net (charge-offs) recoveries................................................. -- -- 1
Provision for loan losses.................................................... 113 61 126
--------- --------- -------------
Balance at end of period..................................................... $ 479 $ 306 $ 366
--------- --------- -------------
--------- --------- -------------
Net loans (charged-off) recovered to average loans........................... -- -- --
--------- --------- -------------
--------- --------- -------------
Allowance for loan losses to total non-performing loans...................... 0.55% 0.36% 0.45%
--------- --------- -------------
--------- --------- -------------
Allowance for loan losses to total loans..................................... 25.00% 25.95% 31.02%
--------- --------- -------------
--------- --------- -------------
Net loans (charged-off) recovered to allowance for loan losses............... -- -- 0.27%
--------- --------- -------------
--------- --------- -------------
</TABLE>
The following table presents the allocation of the allowance for loan
losses to the total amount of loans in each category listed at the dates
indicated.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------
<S> <C> <C>
PERCENT OF
LOANS
IN EACH
CATEGORY
AMOUNT TO TOTAL LOANS
----------- ---------------
(DOLLARS IN THOUSANDS)
One- to four-family residential.................................... $ 294 78.74%
Multi-family residential........................................... 100 13.46
Land and construction.............................................. 50 6.39
Consumer loans..................................................... 35 1.41
----- ------
Total.............................................................. $ 479 100.00%
----- ------
----- ------
</TABLE>
9
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Results of Operations for the Three Months Ended March 31, 1997 and 1996
GENERAL. The Corporation reported net income of $224,000 during the
three months ended March 31, 1997 compared to $227,000 during the three
months ended March 31, 1996.
INTEREST INCOME. Interest income increased $97,000 or 5.2% to $1.9
million for the three months ended March 31, 1997 compared to the same period
in 1996. The increase during the 1997 period was due to an increase in the
average outstanding balance of the Corporation's loan portfolio. Such
increase was due to continued loan demand and portfolio growth. The average
yield earned on the Corporation's interest-earning assets remained stable at
8.60% for the three months ended March 31, 1997 compared to the same period
in 1996.
INTEREST EXPENSE. Interest expense increased $144,000 or 16.6% to $1.0
million for the three months ended March 31, 1997 compared to the same period
in 1996. Such increase was primarily due to an increase in the average
outstanding balance of time deposits and borrowed funds. The increase in the
average balance of time deposits reflects the shift in deposits from passbook
accounts to higher rate certificate of deposit accounts. The increase in the
average balance of borrowed funds was due to increased funding needs.
PROVISION FOR LOSSES ON LOANS. The provision for losses on loans
amounted to $101,000 and $61,000 for the three months ended March 31, 1997
and 1996, respectively. The increase in the provision for losses on loans was
due to an increase in the level of non-performing loans.
OTHER INCOME. Other income increased $5,000 or 12.8% during the three
months ended March 31, 1997 compared to the same period in 1996 due primarily
to an increase in fees and charges relating to loans.
OTHER EXPENSES. Operating expenses decreased $104,000 or 16.3% for the
three months ended March 31, 1997 compared to the same period in 1996. Such
decrease was primarily due to a $53,000 or 26.1% decrease in miscellaneous
other expenses and a $23,000 or 8.0% decrease in salaries and employee
benefits.
Results of Operations for the Six Months Ended March 31, 1997 and 1996
GENERAL. The Corporation reported net income of $484,000 for the six
months ended March 31, 1997 compared to $554,000 during the six months ended
March 31, 1996. Such decrease was primarily due to an increase in the
provision for losses in loans and an increase in other expenses.
INTEREST INCOME. Interest income increased $195,000 or 5.4% to $3.8 million
for the six months ended March 31, 1997 compared to the same period in fiscal
1996. The increase
10
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during the fiscal 1997 period was due to an increase in the average
outstanding balance of the Corporation's loan portfolio. The increase in the
average balance of the loan portfolio was due to continued loan demand and
portfolio growth.
INTEREST EXPENSE. Interest expense increased $221,000 or 12.6% to $2.0
million for the six months ended March 31, 1997 compared to $1.8 million for
the six months ended March 31, 1996. Such increase was primarily due to an
increase in the average outstanding balance of time deposits and borrowed
funds. The increase in the average balance of time deposits reflects the
shift in deposits from passbook accounts to higher rate certificate of
deposit accounts. The increase in the average balance of borrowed funds
was due to increased funding needs.
PROVISION FOR LOSSES ON LOANS. The provision for losses on loans
amounted to $113,000 and $66,000 for the six months ended March 31, 1997 and
1996, respectively. The increase in the provision for losses on loans was due
to an increase in the level of non-performing loans.
OTHER INCOME. Other income increased $22,000 or 31.0% during the six
months ended March 31, 1997 compared to the six months ended March 31, 1996
due to an increase in fees and charges relating to loans.
OTHER EXPENSES. Operating expenses increased $38,000 or 3.5% to $1.1
million for the six months ended March 31, 1997 compared to the same period
in fiscal 1996. Such increase was primarily due to an increase of $79,000 or
16.2% in salaries and employee benefits. The increase in salaries and
employee benefits was due to normal merit increases.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank's
primary sources of funds are deposits, borrowings, amortization, prepayments
and maturities of outstanding loans, sales of loans, maturities of investment
securities and other short-term investments and funds provided from
operations. While scheduled loan amortization and maturing investment
securities and short-term investments are relatively predictable sources of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition. The Bank manages the
pricing of its deposits to maintain a steady deposit balance. In addition,
the Bank invests excess funds in overnight deposits and other short-term
interest-earning assets which provide liquidity to meet lending requirements.
The Bank has generally been able to generate enough cash through the retail
deposit market, its traditional funding source, to offset the cash utilized
in investing activities. As an additional source of funds, the Bank may
borrow from the FHLB of Cincinnati and has access to the Federal Reserve
discount window. At March 31, 1997, the Bank had $9.7 million of outstanding
advances from the FHLB of Cincinnati.
11
<PAGE>
As of March 31, 1997, the Bank's regulatory capital was well in excess of
all applicable regulatory requirements. At March 31, 1997, the Bank's
tangible, core and risk-based capital ratios amounted to 15.0%, 15.0% and
24.1%, respectively, compared to regulatory requirements of 1.5%, 3.0% and
8.0%, respectively.
12
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FORT THOMAS FINANCIAL CORPORATION AND SUBSIDIARY
PART II
Item 1. Legal Proceedings
Neither the Corporation nor the Bank is
involved in any pending legal proceedings
other than non-material legal proceedings
occurring in the ordinary course of business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security
Holders
The Corporation held its 1997 annual meeting
of stockholders on Monday, January 27, 1997.
The following information sets forth the
matters considered at such annual meeting and
the voting with respect to such matters.
1. ELECTION OF DIRECTORS FOR WITHHELD Not Voted
----- -------- ------------
a. Larry N. Hatfield 1,256,729 5,875 283,621
b. Robert L. Grimm 1,256,729 5,875 283,621
c. Harold A. Luersen 1,255,929 6,675 283,621
d. Don J. Beckmeyer 1,256,729 5,875 283,621
e. J. Steven McLane 1,256,729 5,875 283,621
2. RATIFICATION OF AUDITORS
For Against Abstain Not Voted
--- ------- ------- ---------
1,247,746 5,075 9,783 283,621
13
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Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
14
<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.
FORT THOMAS FINANCIAL CORPORATION
Date: May 12, 1997 By: /s/Larry N. Hatfield
------------------------
Larry N. Hatfield
President and Chief Executive Officer
Date: May 12, 1997 By: /s/J. Michael Lonnemann
---------------------------
J. Michael Lonnemann
Vice President, Secretary and
Principal Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 267
<INT-BEARING-DEPOSITS> 1399
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1770
<INVESTMENTS-CARRYING> 3495
<INVESTMENTS-MARKET> 0
<LOANS> 84710
<ALLOWANCE> 479
<TOTAL-ASSETS> 94681
<DEPOSITS> 68515
<SHORT-TERM> 2600
<LIABILITIES-OTHER> 1222
<LONG-TERM> 6351
0
0
<COMMON> 16
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</TABLE>
