FORM 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 September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-9785
TRI CITY BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1158740
------------- ---------------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
6400 S. 27th Street, Oak Creek, WI
(Address of principal executive offices)
53154
Zip Code
(414) 761-1610
----------------------
(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
----- -----
The number of shares outstanding of $1.00 par value common stock, as of
September 30, 2001: 2,626,216
FORM 10-Q
TRI CITY BANKSHARES CORPORATION
INDEX
PART 1 - FINANCIAL INFORMATION
Page #
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 2001 and December 31, 2000 3
Consolidated Statements of Income
for the Three Months ended
September 30, 2001 and 2000 4
Consolidated Statements of Income
for the Nine Months ended
September 30, 2001 and 2000 5
Consolidated Statements of Cash Flows
for the Nine Months ended
September 30, 2001 and 2000 6
Notes to Unaudited Consolidated Financial
Statements 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3 Quantitative and Qualitative Disclosures
About Market Risk 16
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 18
2
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS 2001 2000
(Unaudited)
------------- -------------
Cash and due from banks $ 27,787,182 $ 43,873,802
Federal funds sold 37,636,574 1,335,776
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Cash and cash equivalents
Investment securities:
Held-to-maturity (fair
value of 2001 - $121,318,667
2000 - $134,164,593) 118,112,662 134,287,069
Loans 376,639,698 361,771,147
Allowance for loan losses (4,778,314) (4,521,465)
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Net Loans 371,861,384 357,249,682
Premises and equipment 22,684,910 21,593,336
Other assets 4,548,016 4,735,268
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TOTAL ASSETS $ 582,630,728 $ 563,074,933
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 131,421,441 $ 136,522,645
Interesting bearing (over $100,000) 58,504,979 44,214,855
Interest bearing 302,458,701 289,403,636
------------- -------------
Total Deposits
Short-term borrowings:
Securities sold under agreements to repurch 10,076,621 19,787,032
Other 4,703,433 2,233,059
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Other Liabilities 2,277,403 2,017,264
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TOTAL LIABILITIES 509,442,578 494,178,491
Stockholders' equity:
Cumulative Preferred stock,
par value - $1 per share
authorized - 200,000 shares;
issued and outstanding - none
Commonstock,
par value - $1 per share
authorized - 5,000,000 shares;
Issued and outstanding:
2001 - 2,616,216 shares;
2000 - 2,575,797 shares 2,616,216 2,575,797
Additional paid in capital 13,414,328 11,757,507
Retained earnings 57,157,606 54,563,138
------------- -------------
TOTAL STOCKHOLDERS' EQUITY
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 582,630,728 $ 563,074,933
============= =============
See Notes to Unaudited Consolidated Financial Statements.
3
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED)
2001 2000
------------ ------------
Interest income:
Loans, including fees $ 7,995,846 $ 8,032,995
Investment securities:
Taxable 622,698 732,573
Exempt from federal income tax 803,436 1,012,312
Federal funds sold 364,815 222,215
------------ ------------
TOTAL INTEREST INCOME 9,786,795 10,000,095
Interest expense:
Deposits 3,037,282 2,785,484
Short-term borrowings 170,477 787,861
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TOTAL INTEREST EXPENSE 3,207,759 3,573,345
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NET INTEREST INCOME 6,579,036 6,426,750
Provision for loan losses (105,000) (75,000)
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,474,036 6,351,750
Other income:
Service charge income 682,413 712,456
Rental income 317,562 235,731
Gain or Sale of Loans 0 0
Other 757,647 602,376
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TOTAL OTHER INCOME 1,757,622 1,550,563
Other Expense:
Salaries and employee benefits 3,188,481 2,935,060
Net occupancy 774,977 722,735
Equipment 377,042 367,243
Data processing 309,957 289,525
Advertising 227,916 203,203
Regulatory Agency Assessments 52,241 52,667
Office Supplies 134,322 151,580
Other 999,084 582,291
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TOTAL OTHER EXPENSE 6,064,020 5,304,304
Income before income taxes 2,167,638 2,598,009
Provision for income Taxes 529,000 684,000
------------ ------------
NET INCOME $ 1,638,638 $ 1,914,009
============ ============
Per share data:
Net income $ 0.63 $ 0.75
Average shares outstanding $ 2,613,477 $ 2,559,943
See Notes to Unaudited Consolidated Financial Statements.
4
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(UNAUDITED)
2001 2000
------------ ------------
Interest income:
Loans, including fees $ 24,285,516 $ 22,544,282
Investment securities:
Taxable 2,036,279 2,495,140
Exempt from federal income tax 2,493,228 2,838,765
Federal funds sold 662,996 864,327
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TOTAL INTEREST INCOME 29,478,019 28,742,514
Interest expense:
Deposits 9,270,877 8,244,615
Short-term borrowings 703,778 1,834,091
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TOTAL INTEREST EXPENSE 9,974,655 10,078,706
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NET INTEREST INCOME 19,503,364 18,663,808
Provision for loan losses (315,000) (225,000)
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 19,188,364 18,438,808
Other income:
Service charge income 2,079,829 2,230,756
Rental income 942,576 724,890
Gain on Sale of Loans 0 8,672
Other 2,183,427 2,518,431
------------ ------------
TOTAL OTHER INCOME 5,205,832 5,482,749
Other expense:
Salaries and employee benefits 9,225,334 8,786,272
Net occupancy 2,255,154 2,198,805
Equipment 1,112,506 1,059,868
Data processing 903,634 852,632
Advertising 526,914 500,294
Regulatory agency assessments 155,763 154,961
Office supplies 435,911 428,452
Other 2,296,616 1,855,586
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TOTAL OTHER EXPENSE 16,911,832 15,836,870
Income before income taxes 7,482,364 8,084,687
Provision for income taxes 1,936,000 2,172,000
------------ ------------
NET INCOME $ 5,546,364 $ 5,912,687
============ ============
Per share data:
Net income $ 2.13 $ 2.32
Common stock investment $ 28.15 $ 26.39
Dividends $ 1.140 $ 1.050
Average shares outstanding 2,600,350 2,550,492
See Notes to Unaudited Consolidated Financial Statements.
5
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
2001 2000
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OPERATING ACTIVITIES
Net income $ 5,546,364 $ 5,912,687
Adjustments to reconcile net income
to net cash provided by operating
activities:
Proceeds from sale of loans
held for sale 39,216,711 3,472,010
Origination of loans held
for sale (39,216,711) (3,472,010)
Amortization of investment
securities premiums and
accretion of discounts 107,517 168,807
Provision for loan losses 315,000 225,000
Provision for depreciation 1,484,590 1,406,259
(Increase) in interest receivable 263,989 (359,005)
(Decrease) in interest payable 35,998 (34,270)
Other 147,396 2,143,368
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 7,900,854 9,462,846
INVESTING ACTIVITIES
Investment Securities Held to Maturity:
Proceeds from maturities and redemptions
of investment securities 50,045,053 7,384,881
Purchase of investment
securities (33,978,160) (1,000,000)
Net increase in loans (14,926,702) (38,044,894)
Purchases of premises and equipment (2,576,164) (1,370,673)
------------ ------------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES (1,435,973) (33,030,686)
FINANCING ACTIVITIES
Net increase (decrease) in deposits 22,243,985 (32,147,268)
Net increase in short-term
borrowings (7,240,037) 40,624,304
Issuance of Common Stock 1,697,240 940,858
Cash dividends (2,951,891) (2,671,188)
------------ ------------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 13,749,297 6,746,706
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INCREASE IN CASH
AND CASH EQUIVALENTS 20,214,178 (16,821,134)
Cash and cash equivalents at the
beginning of the period 45,209,578 45,481,918
------------ ------------
CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD $ 65,423,756 $ 28,660,784
============ ============
See Notes to Unaudited Consolidated Financial Statements.
6
TRI CITY BANKSHARES CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(A) Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. These financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Annual Report on Form 10-K of Tri City Bankshares
Corporation ("Tri City" or the "Corporation") for the year ended December 31,
2000. The December 31, 2000 financial information included herein is derived
from the December 31, 2000 Consolidated Balance Sheet of Tri City which is
included in the aforesaid Annual Report on Form 10-K. In the opinion of Tri
City's management, the accompanying unaudited consolidated financial statements
contain all adjustments, consisting of normal recurring accruals, necessary to
present fairly Tri City's financial position as of September 30, 2001 and the
results of its operations for the three month and nine month periods ended
September 30, 2001 and 2000 and cash flows for the nine months ended September
30, 2001 and 2000. The operating results for the first nine months of 2001 are
not necessarily indicative of the results which may be expected for the entire
2001 fiscal year.
(B) Accounting Changes
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
7
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.
The Corporation will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
Statements is not expected to have a material effect on the earnings or
financial position of the Corporation.
(C) Pending Litigation
Tri City is the defendant in two separate actions pending in Milwaukee County,
Wisconsin, Circuit Court. Both of the actions arise out of a loan fraud
perpetrated by an individual not affiliated with the bank. Two former employees
of Tri City were convicted of providing false information used by the individual
to fraudulently obtain loans. The court granted one of the plaintiffs summary
judgment on liability, and the case has been set for trial on damages commencing
April 15, 2002. The second action is in the early stages of discovery. An
estimate of the Corporation's liability with respect to the claims cannot be
reasonable made with currently available information. The bank's fidelity bond
insurer has denied the bank's initial request for coverage of losses which may
result from these lawsuits. However, after consultation with outside counsel the
Corporation believes that damages that may be awarded for either or both cases
should be covered by the bank's fidelity bond. If our views prevail this
litigation should not have a material effect on the Corporation's results of
operations.
8
TRI CITY BANKSHARES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion contains certain "forward-looking statements,"
including statements concerning objectives and future events or performance, and
other statements which are other than historical fact. Factors which may cause
actual results to differ materially from those contemplated by such
forward-looking statements include, but are not limited to, the following
possibilities: (i) lower than anticipated loan and deposit growth due to a
variety of factors, including changes in the interest rate environment and an
increase in competitive pressures in the banking and financial services
industry; (ii) insufficient reserves for loan losses; (iii) poorer than expected
general economic conditions; (iv) legislation or regulatory changes which
adversely affect the banking industry; and (v) other unanticipated occurrences.
CHANGES IN FINANCIAL POSITION
Net assets of Tri City Bankshares Corporation (the "Corporation") have
increased $19.6 million (3.5%) during the nine months ended September 30, 2001.
Loan growth has slowed during the second and third quarters, and as a result
loan portfolio increases during the first nine months of 2001 were $14.9
million. The uncertainty of the current economy and national events during the
past several months have slowed the demand for loans. Management continues its
growth goals as lenders in the banking subsidiary work toward new business
development despite the slowdown. The reserve for loan losses has increased
$256,850 (5.7%) in the first nine months of 2001. This growth is reflective of
the overall increase in loans during the past twelve months and not the result
of increases required by a deterioration of the loan portfolio. Management
assessment of portfolio performance reflects stable loan delinquency,
collection, non-accrual and charge off levels. Management reviews the adequacy
of the Corporation's reserve for loan loss quarterly, and considers the level of
non-performing loans, loan portfolio size and composition, borrower's financial
9
condition, general economic conditions, collateral adequacy and historical loss
experience. The average loan charge-off history for the Corporation has remained
low and management believes the current slowdown in the economy market should
not require an increase in the reserve.
Investment securities decreased during the first nine months of 2001 by $16.2
million (12.0%). A significant number of investments have been called due to the
rapid decline in interest rates during the first nine months of 2001. Replacing
these called securities, and reinvesting normally maturing securities have
reduced the investment portfolio average yield. Redeployment opportunities at
reasonable yields are limited and short term placement in Federal funds has also
lowered margins as the Federal Reserve has dramatically reduced short term
rates. Temporary positions in Federal funds until suitable investment securities
can be found accounts for the $20.2 million (44.7%) increase in cash and cash
equivalents during the first nine months of 2001.
Premises and equipment have increased $1.1 million (5.1%) during the first nine
months of 2001. A new brick and mortar branch location in South Milwaukee,
Wisconsin is primarily responsible for this increase. The Corporation has also
replaced equipment at its service center in anticipation of offering customers
"check imaging" statements in the near future.
During the first nine months of 2001, deposits have increased $22.2 million
(4.7%). Management continues to work diligently to maintain and expand the
Corporation's deposit base. Promotional offers are intended to attract new
customers and keep existing ones. The dramatic decline in rates during 2001
requires management to devise ways to offer customers savings instruments which
provide some flexibility and competitive rates. The goal, as always, is
maintaining a competitive edge while still ensuring the profitability of the
Corporation.
10
LIQUIDITY
The ability to provide the necessary funds for the day-to-day operations of the
Corporation depends on a sound liquidity position. Management has continued to
monitor the Corporation's liquidity position by reviewing the maturity
distribution between interest earning assets and interest bearing liabilities.
Fluctuations in interest rates can be the primary cause for the flow of funds
into or out of a financial institution. The Corporation continues to offer
products that are competitive and will encourage depositors to leave their funds
in the Corporation's banking subsidiary. Management believes that their efforts
will help the Corporation not only to retain these deposits, but also to
encourage continued growth. In the event the Corporation's primary source of
liquidity, the core deposits of its banking subsidiary, is insufficient to meet
liquidity needs, the banking subsidiary had federal funds sold availability at
quarter end to meet funding demand of $24.3 million. The banking subsidiary also
has a $30 million federal funds purchase facility available through its
correspondent bank relationship. In addition, the subsidiary has $34 million
available for short term liquidity through reverse repurchase agreements.
CAPITAL RESOURCES
During the first nine months of 2001 the Corporation has opened a new full
service brick and mortar branch in South Milwaukee, Wisconsin. The Corporation
also replaced some item processing equipment at its item processing center in
anticipation of offering check imaging to customers as a alternative to
returning cancelled checks in their statements. These projects cost
approximately $2 million and were funded internally. There are no other major
projects currently planned for 2001; however, management continues to examine
ways in which the Corporation can grow and increase its profitability. Presented
with the right opportunity, management will act according to the best interests
of the Corporation.
11
RESULTS OF OPERATIONS
Three Months ended September 30, 2001 and 2000
----------------------------------------------
Net income for the Corporation has decreased $430,600 (32.8%) during the third
quarter ended September 30, 2001 compared to an increase of $177,100 (10.2%)
during the same period in 2000. Professional fees for the banking subsidiary,
including legal and related expenses associated with pending litigation
increased $230,200. Additionally, as the prime rate and interest rates in
general have continued to slide downward, the net interest margin of the banking
subsidiary has been compressed. The slowing economy has also dampened loan
demand. New loans for the third quarter of 2001 increased $1.1 million compared
to an increase of $12.9 million in 2000. As a result, while the loan portfolio
remained stable, loan growth did not provide a positive contribution to interest
income on loans and net income overall as it has for several recent quarters.
As prime tied and maturing loans reprice in a declining rate scenario, the
overall average yield in the loan portfolio also decreases, although fees earned
on loans have continued to remain stable. The average yield on loans was 7.85%
as of September 30, 2001 compared to an average yield of 8.73% as of September
30, 2000.
Interest income on investment securities decreased $318,700 (18.3%) during the
third quarter of 2001 compared to a decrease of $216,700 (11.0%) in the third
quarter of 2000. Declining rates have continued to affect the investment
securities as well. A portion of available securities carry call provisions
which enable them to advance their maturity dates. As rates have continued to
decline, most securities which have call features have been called and reissued
at lower yields. Management has allowed the investment portfolio to contract
through the third quarter.
12
Interest earned on Federal Funds sold has decreased $208,900 during the third
quarter ended September 30, 2001 compared to an increase of $212,700 in the
third quarter ended September 30, 2000. Interest yields earned on Federal Funds
sold have decreased substantially from a September 2000 average yield of 6.6% to
a September 2001 average yield of 3.1%.
Interest expense on deposits increased $251,800 (9.0%) in the three months ended
September 30, 2001 compared to an increase of $169,400 (6.5%) in the three
months ended September 30, 2000. Although interest rates have declined, deposits
have increased substantially. Some repricing occurred daily during the quarter
on immediately repricable deposits. Other deposit products were reviewed
periodically during the quarter and repriced in accordance with the market and
the competition. Additional reductions in interest expense will occur in the
fourth quarter as a large block of high yielding certificates of deposit mature.
Management's goal is to invest these funds into instruments that will give the
Corporation an adequate spread and still maintain a positive liquidity position.
Management strives to maintain a liquidity position in which the Corporation can
adjust to drastic rate changes and still maintain strong profitability. Interest
expense on borrowed funds decreased $617,400 (78.4%) during the third quarter of
2001 compared to an increase of $581,900 (282.6%) in the third quarter of 2000.
The Corporation was not only paying lower rates for borrowed funds but also
experienced lower balances. In 2000 the Corporation paid an average of 6.3% on
quarterly average borrowings of $50.4 million while in 2001 the average rate
dropped to 2.6% on quarterly average borrowings of $21.6 million.
Other income increased $207,000 (13.4%) in the three months ended September 30,
2001 compared to a decrease of $173,400 (10.1%) in the three months ended
September 30, 2000. The Corporation has begun to offer investment services to
its customers and income from this venture has added to net income. Fees derived
from check card usage have also increased significantly.
13
Other expenses increased $759,700 (14.3%) in the third quarter of 2001 compared
to an increase of $94,400 (1.8%) in the third quarter of 2000. Again,
significant increases in legal and professional fees related to pending
litigation are a major contributor to this increase. A second contributor is the
dramatic increase of the health care benefit for full time employees. This
increase for the third quarter was $79,700 over the cost of the same benefit
during the same period last year.
A summarized change in income for the quarters appears below:
Three Months Ended September 30, September 30, 2001
2001 2000 Over (Under)
(UNAUDITED) (UNAUDITED) 2000
------- ------- -------
Revenue and Expenses: (000's)
Interest Income $ 9,787 $10,000 (213)
Less: Interest Expense 3,208 3,573 (365)
------- ------- -------
Net Interest Income 6,579 6,427 152
Less: Provision for Loan Loss 105 75 30
Other Operating Expense
Net of Other Operating
Revenues 4,306 3,754 552
------- ------- -------
Income Before Income Taxes 2,168 2,598 (430)
Tax Provision 529 684 (155)
------- ------- -------
NET INCOME $ 1,639 $ 1,914 $ (275)
======= ======= =======
Nine Months ended September 30, 2001 and 2000
---------------------------------------------
Net income for the first nine months of 2001 decreased $366,300 (6.2%) compared
to an increase of $839,300 (16.5%) in the first nine months of 2000. During the
first quarter of 2000 the Corporation sold its investment in the First National
Bank of Eagle River, Wisconsin. If 2000 net income is adjusted for the gain and
associated taxes on this transaction, then net income for the first nine months
of 2001 would have increased $126,500 (2.3%) compared to an increase of $346,400
(6.4%) in the first nine months of 2000.
14
Interest income and fees on loans increased $1.7 million (7.7%) during the first
nine months of 2001 compared to an increase of $3.5 million (18.3%) during the
first nine months of 2000. Although the loan portfolio has increased $14.9
million since December 31, 2000, interest rates have been steadily declining
during 2001 with the Federal Reserve lowering their lending rate seven times
during the first nine months of 2001. Management believes that commercial loan
demand will remain remain soft through the remainder of this year. Consumer loan
demand has also softened as the auto industry stimulates with 0% APR offers. One
exception in the loan sector has been increased activity in home mortgage loans.
These loans do not increase the banking subsidiary's loan portfolio as they are
ultimately sold in the secondary market. They are nonetheless very good business
and management has taken steps to increase production capacity for this product
because the activity produces fee income from closing costs, long term revenue
from servicing fees and brings new customers to the bank.
Interest income on investment securities has decreased $804,400 (15.1%) in the
nine months ended September 30, 2001 compared to a decrease of $474,100 (8.2%)
in the nine months ended September 30, 2000. Rapidly falling interest rates have
encouraged early calls on those securities that were issued with this feature.
Municipalities have taken advantage of this environment and have called their
obligations if they could and reissued them at much lower yields.
Interest expense on deposits increased $1.0 million (12.4%) during the first
nine months of 2001 compared to an increase of $408,100 (5.2%) in the first nine
months of 2000. Deposit balances increased $22.2 million in the first nine
months of 2001 compared to a decrease of $32.1 million during the same period in
2000. The increase in expense due to balance increase has more than offset the
decrease attributed to the drop in rates on these deposits. Interest on borrowed
funds has decreased during the first nine months of 2001 $1.1 million (61.6%)
compared to an increase of $1.5 million (547.1%) during the first nine months of
15
2000. Proceeds from short-term funding agreements entered into during the first
quarter of 2000 have been withdrawn and rates have drastically fallen on
borrowed funds.
Other expenses net of other income increased $1.3 million (13.1%) during the
first nine months of 2001 compared to an increase of $213,200(2.1%) during the
first nine months of 2000. During 2001 the Corporation encountered additional
expenses from operations started at a new branch office in South Milwaukee,
Wisconsin, and from new equipment purchased for the document imaging process at
the Corporation's service center. The Corporation also realized a gain of
$811,000 on the sale of its investment in an affiliated bank during 2000.
CAPITAL ADEQUACY
Federal banking regulatory agencies have established capital adequacy rules
which take into account risk attributable to balance sheet assets and
off-balance-sheet activities. All banks and bank holding companies must meet a
minimum risk-based capital ratio of 8.0% of which 4.0% must be comprised of tier
1 capital.
The federal banking agencies also have adopted leverage capital guidelines which
banking organizations must meet. Under these guidelines, the most highly rated
banking organizations must meet a minimum leverage ratio of at least 3.0% tier 1
capital to total assets, while lower rated banking organizations must maintain a
ratio of at least 4.0% to 5.0%. The risk-based capital ratio for the Corporation
is 19.76% and its leverage ratio is 12.60%.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation's Annual Report on Form 10-K for the year ended December 31,
2000 contains certain disclosures about market risks affecting the Corporation.
There have been no material changes to the information provided which would
require additional disclosures as of the date of this filing.
16
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
See footnote C of the Corporation's financial statements
for information pertaining to legal proceedings.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
17
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.
TRI CITY BANKSHARES CORPORATION
(Registrant)
DATE: November 13, 2001 /s/Henry Karbiner,Jr.
--------------------- ----------------------------------
Henry Karbiner, Jr., President and
Chief Executive Officer
(Principal Executive Officer)
DATE: November 13, 2001 /s/Thomas W. Vierthaler
--------------------- ------------------------------
Thomas W. Vierthaler
Vice President and Comptroller
(Chief Accounting Officer)
18