Totally Committed to Shelby County
1996 Annual Report
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Shelby County Bancorp
A REPORT TO OUR SHAREHOLDERS
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TO OUR SHAREHOLDERS
To Our Shareholders
1996 As we begin our 60th year of operation, I am pleased to report that
fiscal year 1996 was another successful, profitable one for Shelby County
Bancorp. The past year has seen the company continue to increase its customer
base, services, products and technology.
Throughout the year, we continued our commitment to help Shelbyville and
Shelby County prosper and grow. We have been very involved in efforts to bring
more business and industry to our city and county, working closely with the
local Chamber of Commerce and various industry development organizations. We're
currently financing major single-family and condominium construction projects to
provide much needed housing and a better quality of life for residents of our
community. We've also aided local business owners with their efforts to grow and
prosper, by providing financing on a timely basis. Since Shelby County Bancorp
is headquartered right here, we're totally dedicated to the Shelby County
community and to helping local residents realize their goals and dreams. We
strive to provide customers with the very best in fast, friendly, efficient
financial service.
For the fiscal year ending September 30, 1996, net income was $236,000, or
$1.32 per share, a decrease of 32.0 percent from 1995 fiscal year earnings of
$338,000, or $1.94 per share. Net income was drastically affected by the payment
of a special one-time premium assessment to the Savings Association Insurance
Fund (SAIF) in the amount of $332,077 to recapitalize the SAIF. Recently enacted
federal legislation made it mandatory for SAIF insured thrift institutions
nationwide to make a special contribution to the fund.
Although this assessment had a negative impact on this year's earnings, it
will have a very positive impact in the future for Shelby County Bancorp, our
industry and depositors throughout the country. The recapitalization of SAIF
assures savings customers that their deposits are totally safe. Also, the
strengthened fund brings about greatly reduced regular insurance premiums for
Shelby County Bancorp and other SAIF insured institutions. This should certainly
benefit our bottom line in the years ahead.
Total assets for the company increased 22 percent from $67,887,000 at
fiscal year 1995 to $82,676,000 at fiscal year 1996. This is our greatest annual
increase ever.
[PHOTOGRAPH OF RODNEY L. MEYERHOLTZ,
PRESIDENT AND CEO OF SHELBY COUNTY BANCORP.]
Loans receivable for fiscal year 1996 increased 30.6 percent from
$50,600,000 (fiscal year 1995) to $66,098,000. This increase is also an all-time
high.
Deposits for fiscal year 1996 increased 6.7 percent to $65,286,000 from
fiscal year 1995's total of $61,202,000.
Net interest income after provision for loan losses improved by $154,000,
indicating Shelby County's ability to maintain strong margins through its growth
in non-mortgage products. Non-mortgage products contain higher rates with
shorter terms than mortgage loans. At the same time, interest rates raised the
Company's cost of funds, but the well-balanced, higher-rate non-mortgage
products helped to maintain strong margins for the Company throughout the year.
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Non-performing assets have dropped to an all-time low of .30 percent of total
assets. This stellar percentage is attributed to Shelby County's excellent loan
underwriting and collection policies. Our healthy local economy and character of
our loan customers also contribute to this excellent statistic.
The realm of business in which we operate is affected by changes in the economy,
federal regulation, competition, and the interest rate environment. As we deal
with these aspects, we look forward to 1997 to continue improving our products,
services, profits and your investment in Shelby County Bancorp.
As always, your comments and suggestions on how we may better serve you are
welcome.
/s/ Rodney L. Meyerholtz
President and Chief Executive Officer
Table of Contents
President's Message to Shareholders 1
Selected Consolidated Financial Data 3
Financial Highlights 5
Management's Discussion and Analysis 6
Independent Auditor's Report 14
Consolidated Statements of
Financial Condition 15
Consolidated Statements of Earnings 16
Consolidated Statements of
Shareholders' Equity 17
Consolidated Statements of Cash Flows 18
Notes to Financial Statements 19
Directors and Officers 30
Shareholder Information Back Cover
Description of Business
Shelby County Bancorp (the "Corporation") is an Indiana corporation organized in
June, 1991 to become a unitary savings and loan holding company. The Corporation
became a unitary savings and loan holding company upon the conversion of Shelby
County Savings Bank, FSB ("SCSB") from a federal mutual savings bank to a
federal stock savings bank in October, 1991. The Corporation is the sole
shareholder of SCSB. The Corporation and SCSB conduct business from its main
office in Shelbyville, Indiana with branch offices for SCSB in Shelbyville, St.
Paul, and Morristown, Indiana. SCSB is and historically has been among the top
residential real estate lenders in Shelby County and is the largest locally
owned financial institution based in Shelby County. SCSB offers a variety of
retail deposits and lending services to retail and commercial customers in
Shelby County. The Corporation has no business activity other than being the
holding company for SCSB.
[PHOTOGRAPH OF NEW HOM FINANCED BY SHELBY COUNTY SAVINGS BANK.]
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SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data of the Corporation and its
subsidiary is qualified in its entirety by, and should be read in conjunction
with, the consolidated financial statements, including notes thereto, included
elsewhere in this Annual Report.
At September 30,
(In Thousands, Except per Share Amounts) 1996 1995 1994 1993 1992
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Summary of Financial Condition:
Total assets $ 82,676 $ 67,887 $ 57,123 $ 59,343 $53,232
Loans receivable, net 66,098 50,600 43,136 41,697 40,405
Investment securities 8,511 7,281 5,470 7,403 360
Cash, including interest-bearing deposits 4,923 7,242 3,556 5,386 8,946
Government trust mutual fund - - - 2,022 1,914
Investment in FHLB stock 620 409 409 377 377
Deposits 65,286 61,202 51,068 53,992 48,102
Common stock1 1,358 1,341 1,341 1,324 1,324
Retained earnings-substantially restricted 4,745 4,579 4,304 4,002 3,615
Book value per share1 36.56 35.65 33.54 30.87 28.63
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Year Ended September 30,
(In Thousands, Except per Share Amounts) 1996 1995 1994 1993 1992
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Summary of Operating Results:
Total interest income $ 5,839 $ 4,876 $ 4,375 $ 4,506 $4,592
Total interest expense on FHLB advance
and other borrowings 122 181 - - -
Total interest expense on deposits 3,219 2,396 2,138 2,305 2,742
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Net interest income 2,498 2,299 2,237 2,201 1,850
Provision for loan losses 100 55 66 52 52
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Net interest income after
provision for loan losses 2,398 2,244 2,171 2,149 1,798
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Non-interest income:
Service charges and fees 236 197 146 153 138
Other 282 171 145 174 65
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Total non-interest income 518 368 291 327 203
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Non-interest expense:
Salaries and employee benefits 940 939 758 802 639
SAIF special assessment 332 - - - -
Other 1,274 1,139 1,135 1,114 886
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Total non-interest expense 2,546 2,078 1,893 1,916 1,525
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Earnings before income taxes 370 534 569 560 476
Income taxes 134 196 209 228 202
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Net earnings $ 236 $ 338 $ 360 $ 332 $ 274
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Earnings per share1 $ 1.32 $ 1.94 $ 2.08 $ 1.93 $ 1.51
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Year Ended September 30,
(In Thousands, Except per Share Amounts) 1996 1995 1994 1993 1992
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Average Balance Sheet Data:
Assets $ 74,696 $ 62,536 $ 58,942 $ 56,229 $ 52,052
Loans 58,485 47,034 41,720 42,321 41,458
Interest-bearing liabilities 68,582 54,442 53,249 50,945 46,832
Stockholders' equity 5,367 5,631 5,214 5,077 4,444
Supplemental Data:
Net yield on interest-earning assets2 3.46% 3.81% 3.91% 4.03% 3.67%
Return on assets3 .32 .54 .61 .59 .54
Return on equity4 4.40 6.00 6.91 6.54 6.17
Equity-to-assets5 6 7.78 9.00 10.04 8.79 9.29
Average interest-earning assets to average
interest-bearing liabilities 104.85 106.68 107.37 107.33 107.71
Non-performing assets to total assets6 .30 .67 .95 .83 1.41
Non-performing loans to total loans6 .37 .90 1.25 .69 1.48
Loan loss allowance to toal loans6 .49 .48 .44 .34 .32
Loan loss allowance to non-performing loans6 1.32 .53 .35 .48 .21
Net charge-offs to average loans6 .03 .01 .04 .09 .05
Operating expenses to average assets7 3.41 3.32 3.21 3.41 2.93
Tangible capital ratio 6.40 7.30 9.20 8.70 9.10
Core capital ratio 6.40 7.30 9.20 8.70 9.10
Total risk-based capital ratio 10.30 12.30 17.54 16.80 16.50
Cash dividends per share1 .40 .363 .331 .325 .24
Dividend payout ratio1 29.80% 18.71% 15.93% 16.88% 15.37%
Number of full service offices 4 4 2 2 2
(1) Common stock was issued in the conversion to stock form in October 1991.
(2) Net interest income divided by average interest-earning assets.
(3) Net income divided by average total assets.
(4) Net income divided by average total equity.
(5) Total equity divided by total assets.
(6) At end of period.
(7) Non-interest expense divided by average total assets.
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FINANCIAL HIGHLIGHTS
5 YEAR HISTORY
[TOTAL ASSETS BAR CHART] [TOTAL LOANS BAR CHART]
(In Thousands) (In Thousands)
FY 92 $53,232 FY 92 $40,405
FY 93 $59,343 FY 93 $41,697
FY 94 $57,123 FY 94 $43,136
FY 95 $67,887 FY 95 $50,600
FY 96 $82,676 FY 96 $66,098
[NET INTEREST INCOME [NON-PERFORMING ASSETS
AFTER PROVISION FOR LOAN LOSSES TO TOTAL ASSETS BAR CHART]
BAR CHART] (Expressed as a percentage)
(In Thousands)
FY 92 $1,798 FY 92 1.40%
FY 93 $2,149 FY 93 0.83%
FY 94 $2,171 FY 94 0.95%
FY 95 $2,244 FY 95 0.67%
FY 96 $2,398 FY 96 0.30%
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Shelby County Bancorp (the "Corporation") was formed as part of the conversion
of Shelby County Savings Bank, FSB ("SCSB") from a federal mutual savings bank
to a federal stock savings bank in October of 1991 (the "conversion"). In the
conversion, 172,500 shares of common stock were sold at $10.00 per share. Net
proceeds of the conversion were approximately $1,324,000. Of this amount,
$150,000 was retained by the Corporation and the remainder was used to purchase
all of the common shares of SCSB.
The principal business of savings associations, including SCSB, has historically
consisted of attracting deposits from the general public and making loans
secured by residential and other real estate. SCSB, like the entire savings
association industry, is significantly affected by prevailing economic and
market conditions as well as by government policies and regulations concerning,
among other things, monetary and fiscal affairs, housing and financial
institutions. Deposit flows are influenced by a number of factors, including
interest rates paid on money market funds and other competing investments,
account maturities and level of personal income and savings. In addition,
deposit growth is also affected by how customers perceive the stability of the
financial services industry in general and the savings and loan industry
specifically. Various current events such as regulatory changes, failures of
other thrifts and financing of the deposit insurance fund also have an impact on
deposit growth. Lending activities are influenced by, among other things, the
demand for and supply of housing in the area as well as prevailing interest
rates. Sources of funds for lending activities include deposits, borrowings,
amortization and prepayments of loan principal, retained earnings and funds
provided by operations.
The Corporation's earnings in recent years have been affected by certain changes
that have occurred in the regulatory, economic, and competitive environments in
which savings associations operate. As is the case with most savings
associations, SCSB's earnings are primarily dependent upon its net interest
income. Interest income is a function of the balances of loans and investments
outstanding during a given period of time and the yield earned on such loans and
investments. Interest expense is a function of the amount of deposits and
borrowings outstanding during the same period of time and the rates paid on such
deposits and borrowings. Net interest income is the difference between the
interest income and interest expense. Net interest income of SCSB increased from
$2,299,000 for the year ended September 30, 1995 to $2,498,000 for the year
ended September 30, 1996, a 8.7% increase.
[PHOTOGRAPH OF A STATUE]
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Average Balances and Interest
The following table presents for the periods indicated the monthly average
balances of each category of interest-earning assets and interest-bearing
liabilities, and the interest earned or paid on such amounts. Management
believes that the use of month-end average balances instead of daily average
balances has not caused any material difference in the information presented.
Year Ended September 30,
1996 1995 1994
Average Interest Average Interest Average Interest
(Dollars in Thousands) Balance Earned/Paid Balance Earned/Paid Balanc Earned/Paid
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Interest-earning assets:
Interest-earning deposits $ 5,055 $ 234 $ 4,724 $ 243 $ 7,324 $252
Investment securities 2,998 223 2,967 186 2,696 155
Loans1 58,485 5,036 47,034 4,067 41,720 3,692
Stock in FHLB of Indianapolis 458 35 409 27 392 25
Mortgage-backed securities 5,261 311 5,243 353 5,044 251
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Total interest-earning assets 72,257 5,839 60,377 4,876 57,176 4,375
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Interest-bearing liabilities:
Passbook accounts 10,175 313 11,743 376 14,949 486
NOW and money market accounts 13,062 302 12,055 312 11,232 276
Certificates of deposit 43,173 2,604 30,644 1,708 27,069 1,376
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Total deposits 66,410 3,219 54,442 2,396 53,250 2,138
Borrowings 2,503 122 2,154 181 - -
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Total interest-bearing liabilities 68,913 3,341 56,596 2,577 53,250 2,138
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Net interest-earning assets $ 3,344 $ 3,781 $ 3,926
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Net interest income $ 2,498 $ 2,299 $ 2,237
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Average interest-earning assets to
average interest-bearing liabilities 104.85% 106.68% 107.37%
(1) Average balances include non-accrual loans.
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Interest Rate Spread
The following table sets forth the weighted average effective interest rate
earned by SCSB on its loan and investment portfolios, the weighted average
effective costs of SCSB's deposits and borrowings, the interest rate spread of
SCSB, and the net yield on weighted average interest-earning assets for the
periods and as of the date shown. Average balances are based on month-end
average balances.
At
September 30, Year Ended September 30,
1996 1996 1995 1994
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Weighted average interest rate earned on:
Interest-earning deposits 4.61 4.63 5.14 3.44
Investment securities 7.58 7.44 6.27 5.75
Loans 8.48 8.61 8.65 8.85
Stock in FHLB of Indianapolis 7.85 7.64 6.60 6.38
Mortgage-backed securities 6.82 5.91 6.73 4.98
Total interest-earning assets 8.57 8.08 8.08 7.65
Weighted average interest rate cost of:
Passbook accounts 2.82 3.08 3.20 3.25
NOW and money market accounts 2.15 2.31 2.59 2.46
Certificates of deposit 6.05 6.03 5.57 5.08
Borrowings 5.64 4.87 8.40
Total interest-bearing liabilities 4.86 4.85 4.55 4.02
Interest rate spread1 3.71 3.23 3.53 3.64
Net yield on weighted average
interest-earning assets2 3.46 3.81 3.91
(1) Interest rate spread is calculated by subtracting total weighted average
interest rate cost from total weighted average interest rate earned for the
period indicated. Interest rate spread figures must be considered in light
of the relationship between the amounts of interest-earning assets and
interest-bearing liabilities. Since the Corporation's interest-earning
assets exceeded its interest-bearing liabilities for the three years shown
above, a positive interest rate spread resulted in net interest income.
(2) The net yield of weighted average interest-earning assets is calculated by
dividing net interest income by weighted average interest-earning assets
for the period indicated. No net yield figure is presented at September 30,
1996, because the computation of net yield is applicable only over a period
rather than at a specific date.
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The following table describes the extent to which changes in interest rates
and changes in volume of interest-related assets and liabilities have affected
SCSB's interest income and expense during the periods indicated. For each
category of interest-earning asset and interest-bearing liability, information
is provided on changes attributable to (1) changes in rate (changes in rate
multiplied by old volume) and (2) changes in volume (changes in volume
multiplied by old rate). Changes attributable to both rate and volume that
cannot be segregated have been allocated proportionally to the change due to
volume and the change due to rate.
Increase (Decrease) in Net Interest Income
Total Net Due to Due to
(In Thousands) Change Rate Volume
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Year ended September 30, 1996
compared to year ended
September 30, 1995 Interest-earning assets:
Interest-earning deposits $ (9) $ (25) $ 16
Investment securities 37 35 2
Loans 969 (17) 986
Stock in FHLB of Indianapolis 8 4 4
Mortgage-backed securities (42) (43) 1
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Total $ 963 $ (46) $ 1,009
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Interest-bearing liabilities:
Passbook accounts $ (63) $ (14) $ (49)
NOW and money market accounts (10) (35) 25
Certificates of deposit 896 150 746
Borrowings (59) (85) 26
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Total $ 764 $ 16 $ 748
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Net change in net interest income $ 199 $ (62) $ 261
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Year ended September 30, 1995
compared to year ended
September 30, 1994 Interest-earning assets:
Interest-earning deposits $ (9) $ 99 $ (108)
Investment securities 31 14 17
Loans 375 (86) 461
Stock in FHLB of Indianapolis 2 1 1
Mortgage-backed securities 102 92 10
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Total $ 501 $ 120 $ 381
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Interest-bearing liabilities:
Passbook accounts $ (110) $ (7) $ (103)
NOW and money market accounts 36 15 21
Certificates of deposit 332 140 192
Borrowings 181 -- 181
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Total $ 439 $ 148 $ 291
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Net change in net interest income $ 62 $ (28) $ 90
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YEAR ENDED SEPTEMBER 30, 1996, COMPARED TO YEAR ENDED SEPTEMBER 30, 1995.
GENERAL
Net earnings for the year ended September 30, 1996 were $236,000, compared
to $338,000 for the year ended September 30, 1995, a decrease of $102,000 or
30.2%. Although net interest income after provision for loan losses increased by
$154,000, earnings were effected by a SAIF special assessment of $332,000 and
increased non-interest expenses related to a full year of operations of the two
branches opened in 1995.
Assets increased during the year ended September 30, 1996. Total assets at
September 30, 1996, were $82,676,000 compared to $67,887,000 at September 30,
1995, an increase of $14,789,000, or 21.8%. This increase was primarily due to
an increase in loan receivable of $15,498,000 or 30.6%, from $50,600,000 in 1995
to $66,098,000 in 1996. This growth in loans and deposits is a result of
continued economic expansion in SCSB's primary market area.
INTEREST INCOME
Total interest income for the year ended September 30, 1996 was $5,839,000
compared to $4,876,000 for the year ended September 30, 1995, an increase of
$963,000 or 19.8%. This increase resulted primarily from an increase of
$1,006,000, or 23.7%, in interest earned on loans receivable and interest earned
on investment securities. Although the weighted average interest rate earned in
1996 remained consistent with 1995 at 8.08%, the growth in the loan portfolio
accounted for the increase in interest income. The loan portfolio growth
reflects management's commitment to meet the needs of the growing economy in
Shelby County.
INTEREST EXPENSE
Interest expense for the period ended September 30, 1996, totaled
$3,341,000, an increase of $764,000, or 29.6%, compared with $2,577,000 for the
year ended September 30, 1995. This increase was primarily a result of the
increase in certificates of deposits and the payment of $96,000 in interest on
advances from the Federal Home Loan Bank of Indianapolis. The weighted average
interest rate cost for all deposits and borrowings in 1996 was 4.85% compared to
4.55% in 1995.
PROVISION FOR LOAN LOSSES
SCSB's provision for loan losses was $100,000 for the year ended September
30, 1996, compared to $55,000 for the year ended September 30, 1995. The 1996
provision exceeded net charge-offs of $15,000 during the year ended September
30, 1996. This provision reflects management's intent to provide an increased
general allowance for loan loss and further provide for losses inherent in its
consumer loan portfolio. Management believes that this low level of charge-offs
is a result of SCSB's underwriting guidelines and collection policies and the
relatively strong local economy. Also, the provision resulted in an allowance
for loan loss of $326,000 (.5% of total loans) at September 30, 1996, an amount
management believes adequate to absorb anticipated future loan losses. The
allowance as a percentage of non-performing loans was 1.32% at September 30,
1996, compared to .53% at September 30, 1995. At September 30, 1996,
non-performing loans as a percent of total loans were .37%. This compares
favorably to industry averages and the 1995 percentage of .90%. There were no
mortgage loan foreclosures in 1996 or 1995.
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NON-INTEREST INCOME
Total non-interest income for the year ended September 30, 1996, totaled
$518,000 compared to $368,000 for the year ended September 30, 1995. The most
significant increases in non-interest income were from increased service fees on
checking and savings accounts.
NON-INTEREST EXPENSE
Non-interest expense increased $468,000, or 22.5%, from $2,078,000 for the
year ended September 30, 1995, to $2,456,000 for the year ended September 30,
1996. The increase was primarily due to an increase in premises and equipment
expenses of $102,000 related to a full year of branch operation for the two
branches opened in 1995 and the payment of $332,000 to the Savings Association
Insurance Fund (SAIF) as a special assessment to bolster the Fund's reserves.
[Photograph of scenes from Shelby County life across top border of page.]
YEAR ENDED SEPTEMBER 30, 1995, COMPARED TO YEAR ENDED SEPTEMBER 30, 1994.
GENERAL
Net earnings for the year ended September 30, 1995 were $338,000, compared
to $360,000 for the year ended September 30, 1994, a decrease of $22,000 or
6.1%. The decrease in net earnings was due to increases in non-interest expense
of $184,000 or 9.7%, from $1,894,000 in 1994 to $2,078,000 in 1995 and interest
expense of $439,000 or 20.5% from $2,138,000 in 1994 to $2,577,000 in 1995.
These increases were offset by an increase in interest income of $501,000 or
11.5% from $4,375,000 in 1994 to $4,876,000 in 1995 and an increase in
non-interest income of $77,000 or 26.5% from $291,000 in 1994 to $368,000 in
1995.
[PHOTOGRAPH OF MOTHER WITH CHILD]
Assets increased during the year ended September 30, 1995. Total assets at
September 30, 1995, were $67,887,000 compared to $57,123,000 at September 30,
1994, an increase of $10,764,000, or 18.8%. This increase was primarily due to
an increase in cash and interest-bearing deposits of $3,685,000 or 103.6%, from
$3,556,000 in 1994 to $7,241,000 in 1995 and an increase in loans receivable of
$7,464,000 or 17.3%, from $43,136,000 in 1994 to $50,600,000 in 1995.
INTEREST INCOME
Total interest income for the year ended September 30, 1995 was $4,876,000
compared to $4,375,000 for the year ended September 30, 1994, an increase of
$501,000 or 11.4%. This increase resulted primarily from an increase of
$478,000, or 12.1%, in interest earned on loans receivable and interest earned
on mortgage-backed securities. The weighted average interest rate earned in 1995
increased to 8.08% from 7.65%.
INTEREST EXPENSE
Interest expense for the period ended September 30, 1995, totaled
$2,577,000, an increase of $439,000, or 20.5%, compared with $2,138,000 for the
year ended September 30, 1994. This increase was primarily a result of the
increase in market interest rates for deposits in the area and the payment of
$181,000 in interest on an advance from the Federal Home Loan Bank of
Indianapolis. The weighted average interest rate cost for all deposits in 1995
was 4.55% compared to 4.02% in 1994.
PROVISION FOR LOAN LOSSES
SCSB's provision for loan losses was $55,000 for the year ended September
30, 1995, compared to $66,000 for the year ended September 30, 1994. The 1995
provision exceeded net charge-offs of $3,000 during the year ended September 30,
1995. This provision reflects management's intent to provide an increased
general allowance for loan loss and further provide for losses inherent in its
consumer loan portfolio. Management believes that this low level of charge-offs
is a result of SCSB's underwriting guidelines and collection policies and the
relatively strong local economy. Also, the provision resulted in an allowance
for loan loss of $241,000 at September 30, 1995, an amount management believes
adequate to absorb anticipated future loan losses.
NON-INTEREST INCOME
Total non-interest income for the year ended September 30, 1995, totaled
$368,000 compared to $291,000 for the year ended September 30, 1994. The most
significant increases in non-interest income was from increased service fees on
checking and savings accounts and insurance commissions from The Shelby Group, a
wholly-owned subsidiary of SCSB.
NON-INTEREST EXPENSE
Non-interest expense increased $184,000, or 9.7%, from $1,894,000 for the
year ended September 30, 1994, to $2,078,000 for the year ended September 30,
1995. The increase was primarily due to an increase in salaries and benefits due
to the opening of two new full-service offices.
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LIQUIDITY AND CAPITAL RESOURCES
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The standard measure of liquidity for the savings association industry
is the ratio of cash and eligible investments to a percentage of savings
deposits and borrowings due within one year. The minimum required ratio is
currently set by OTS regulation at 5%, of which at least 1% must be composed of
short-term investments (i.e., generally with a term of less than one year). At
September 30, 1996, SCSB's regulatory liquidity ratio was 7.5%, of which 100%
were short-term investments. This was a decrease of 5.1% from its liquidity
ratio at September 30, 1995. Management believes that SCSB's liquidity level,
both on a short-term and a long-term basis, is sufficient for SCSB's liquidity
needs.
Historically, SCSB has maintained its liquid assets above the minimum
requirements imposed by OTS regulations and at a level believed by management
adequate to meet requirements of normal daily activities and potential deposit
withdrawals. Management monitors the cash flow position periodically to assure
that adequate liquidity is maintained. Cash for liquidity purposes is generated
through loan prepayments, repayments and increases in deposits. Loan payments
are a relatively stable source of funds, while deposit flows are influenced
significantly by the level of interest rates and general market conditions.
SCSB's liquidity, represented by cash and cash equivalents, is a result of its
operating, investing and financing activities.
During the year ended September 30, 1996, there was a net decrease of
$2,319,000 in cash and cash equivalents. The major reason for this decrease was
an increase in loans receivable.
As a member of the Federal Home Loan Bank System ("FHLB System"), SCSB may
borrow from the Federal Home Loan Bank of Indianapolis ("FHLB of Indianapolis").
Borrowings outstanding at September 30, 1996, were $9,746,000, and under OTS
regulations, SCSB could have borrowed up to an additional $17.8 million from the
FHLB of Indianapolis as of that date. As of that date, SCSB had commitments to
fund loan originations of approximately $2.3 million. In the opinion of
management, SCSB has sufficient cash flow and borrowing capacity to meet current
and anticipated funding commitments.
The Corporation is subject to regulations as a savings and loan holding
company by the Office of Thrift Supervision. SCSB, as a subsidiary of a savings
and loan holding company, is subject to certain restrictions in its dealing with
the Corporation. SCSB is subject to regulatory requirements applicable to a
federal savings bank.
Capital regulations require savings institutions to have a minimum
regulatory tangible capital equal to 1.5% of total assets and a minimum core
capital ratio equal to 3% of total assets. Additionally, savings institutions
are required to meet a risk-based capital ratio of 8% of risk-weighted assets.
In connection with the Federal Deposit Insurance Corporation Improvement
Act of 1991, the OTS implemented additional minimal capital standards that place
savings institutions into one of five categories, from "critically
undercapitalized to "well capitalized," depending on levels of three measures of
capital. At each successively lower capital category, an institution is subject
to more restrictive and numerous mandatory or discretionary regulatory actions
and limits. A well capitalized institution, as defined by the regulations, has a
total risked based capital ratio of at least 10 percent, a Tier 1 (core)
risk-based capital ratio of at least six percent, and a leverage (core) risked
based capital of at least five percent. At September 30, 1996, the Savings Bank
was classified as adequately capitalized.
For a description of the origination, purchase and sale of loans, see
"Business - Origination, Purchase and Sale of Loans" in the Form 10-K.
The following is a summary of SCSB's regulatory capital and capital requirements
at September 30, 1996.
GAAP Tangible Core Risk-based
capital capital capital capital
- --------------------------------------------------------------------------------------------------------------------
Corporation GAAP Capital $ 6,433
- --------------------------------------------------------------------------------------------------------------------
SCSB GAAP Capital $ 5,586
- --------------------------------------------------------------------------------------------------------------------
Regulatory Capital $ 5,256,000 $ 5,256,000 $5,582,000
Minimum capital requirement 1,232,000 2,464,000 4,352,000
Excess capital $ 4,024,000 $ 2,792,000 $1,230,000
- --------------------------------------------------------------------------------------------------------------------
Regulatory capital ratio 6.4% 6.4% 10.3%
- --------------------------------------------------------------------------------------------------------------------
Current requirement 1.5% 3.0% 8.0%
- --------------------------------------------------------------------------------------------------------------------
Fully phased-in requirement 3.0% 3.0% 8.0%
- --------------------------------------------------------------------------------------------------------------------
[Photographs of scenes from Shelby County life across top border of page.]
Impact of Inflation
The audited consolidated financial statements presented herein have been
prepared in accordance with generally accepted accounting principles. These
principles require the measurement of financial position and operating results
in terms of historical dollars, without considering changes in the relative
purchasing power of money over time due to inflation.
The Corporation's primary assets and liabilities are monetary in nature. As
a result, interest rates have a more significant impact on performance than the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or with the same magnitude as the price of goods and
services, which is more directly affected by inflation. For a discussion of
management's efforts to reduce its vulnerability to changes in interest rates,
see "Asset/Liability Management" in the Form 10-K.
The principal effect of inflation, as distinct from levels of interest
rates, on the Corporation's earnings is in the area of other expenses. Such
expense items as salaries and employee benefits, occupancy expense and equipment
costs may be subject to increases as a result of inflation.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting No. 121 ("SFAS 121"), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," is
effective for fiscal years beginning after December 15, 1995. This statement
establishes accounting standards for the impairment of long-lived assets,
certain liabilities, certain intangibles and goodwill. Management does not
believe the adoption of SFAS 121 will have a material effect on the financial
position or results of operations of the Corporation.
Statement of Financial Accounting Standards No. 122 ("SFAS 122"),
"Accounting for Mortgage Servicing Rights - an Amendment of FASB Statement No.
65," is effective for fiscal years beginning after December 15, 1995. This
statement specifies conditions under which mortgage servicing rights should be
accounted for separately from the underlying mortgage loans. Management does not
believe the adoption of SFAS 122 will have a material effect on the financial
position or results of operation of the Corporation.
Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation," is effective for fiscal years
beginning after December 15, 1995. The statement establishes a fair value based
method for accounting for stock-based compensation. As allowed by the SFAS 123,
the Corporation plans to continue to use the existing intrinsic method of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for stock options. Certain pro forma and other
information will be disclosed as if the Corporation had measured costs in a
manner consistent with the new statement.
[PHOTOGRAPH OF AERIAL VIEW OF A NEW DEVELOPMENT.]
Statement of Financial Accounting Standards No. 125 ("SFAS 125"),
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities," was issued in June 1996 and provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities. SFAS 125 applies to transfers occurring after December 15, 1996.
Management does not believe the adoption of SFAS 125 will have a material effect
on the financial position or results of operations of the Corporation.
[Photographs of scenes from Shelby County life across top border of page.]
Independent Auditors' Report
The Board of Directors
Shelby County Bancorp:
We have audited the accompanying consolidated statements of financial condition
of Shelby County Bancorp and subsidiary as of September 30, 1996 and 1995, and
the related consolidated statements of earnings, shareholders' equity and cash
flows for each of the years in the three-year period ended September 30, 1996.
These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Shelby County
Bancorp and subsidiary as of September 30, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended September 30, 1996, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwich LLP
Indianapolis, Indiana
November 20, 1996
[PHOTOGRAPH OF REVELOTIONARY WAR FESTIVAL.]
[Photographs of scenes from Shelby County life across top border of page.]
Consolidated Statements of Financial Condition of
Shelby County Bancorp and Subsidiary
September 30, 1996 and 1995
Assets 1996 1995
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents:
Cash $ 1,043,977 813,706
Interest-bearing deposits 3,879,299 6,427,976
----------- ----------
4,923,276 7,241,682
Investment securities available for sale (note 2) 7,243,756 4,449,865
Investment securities held to maturity (market value:
$1,275,713 and $2,874,268) (note 3) 1,267,448 2,830,965
Loans receivable, net (note 4) 66,098,422 50,599,757
Accrued interest receivable on investment securities 104,504 68,281
Accrued interest receivable on loans 424,054 175,688
Stock in FHLB of Indianapolis, at cost 620,100 409,300
Premises and equipment (note 5) 1,874,702 1,965,119
Prepaid expenses and other assets 119,353 146,086
----------- ----------
$82,675,615 67,886,743
=========== ==========
Liabilities and Shareholders' Equity
- --------------------------------------------------------------------------------------------------
Liabilities:
Deposits (note 6) 65,286,137 61,202,074
Advances from FHLB and other borrowings (note 7) 10,071,360 --
Accrued interest on deposits and FHLB advances 133,492 145,237
Income taxes payable 225,237 10,153
Deferred income taxes (note 8) 4,954 134,566
Accrued expenses and other liabilities (note 12) 521,557 184,235
----------- ----------
76,242,737 61,676,265
----------- ----------
Shareholders' equity (notes 8 and 10):
Common stock no par value; shares authorized of 5,000,000,
shares issued and outstanding of 175,950 and 174,225 1,358,123 1,340,873
Retained earnings - substantially restricted 4,744,525 4,578,724
Unrealized appreciation on investment securities
available for sale (note 2) 330,230 290,881
----------- ----------
6,432,878 6,210,478
----------- ----------
Commitments and contingencies (notes 4 and 7)
$82,675,615 67,886,743
=========== ==========
See accompanying notes to consolidated financial statements.
[Photographs of scenes from Shelby County life across top border of page.]
Consolidated Statements of Earnings
For the years ended September 30,
1996 1995 1994
- ----------------------------------------------------------------------------------
Interest income:
Loans receivable $5,036,470 4,067,465 3,692,364
Mortgage-backed securities 311,135 353,161 250,546
Interest-bearing deposits 234,009 243,140 251,694
Investment securities 222,910 185,720 71,189
Government trust mutual fund -- -- 83,933
Dividends from FHLB 35,008 26,560 25,321
---------- --------- ---------
Total interest income 5,839,532 4,876,046 4,375,047
---------- --------- ---------
Interest expense on deposits (note 6) 3,219,473 2,396,189 2,137,583
Interest expense on FHLB advances and other
borrowings (note 7) 122,018 180,898 --
---------- --------- ---------
Total interest expense 3,341,491 2,577,087 2,137,583
---------- --------- ---------
Net interest income 2,498,041 2,298,959 2,237,464
Provision for loan losses (note 4) 100,000 55,000 66,000
---------- --------- ---------
Net interest income after
provision for loan losses 2,398,041 2,243,959 2,171,464
---------- --------- ---------
Non-interest income:
Service charges and fees 235,991 196,553 145,934
Annuity commissions 41,304 96,411 19,311
Other (note 2) 240,478 74,993 125,733
---------- --------- ---------
Total non-interest income 517,773 367,957 290,978
---------- --------- ---------
Non-interest expense:
Salaries and employee benefits 939,740 939,081 758,536
Premises and equipment 271,121 169,464 164,097
Federal deposit insurance (note 12) 484,823 138,101 136,285
Data processing 236,452 207,849 155,909
Advertising 140,476 173,932 117,228
Bank fees and charges 72,403 64,464 62,253
Other 400,518 385,177 499,453
---------- --------- ---------
Total non-interest expense 2,545,533 2,078,068 1,893,761
---------- --------- ---------
Earnings before income taxes 370,281 533,848 568,681
Income taxes (note 8) 134,100 196,200 209,000
---------- --------- ---------
Net earnings $ 236,181 337,648 359,681
========== ======= =======
Earnings per share (note 1) $ 1.32 1.94 2.08
========== ======= =======
See accompanying notes to consolidated financial statements.
[Photographs of scenes from Shelby County life across top border of page.]
Consolidated Statements of Shareholders' Equity of Shelby County Bancorp and
Subsidiary
For the years ended September 30, 1996, 1995 and 1994
Unrealized
appreciation on
investment Total
securities share-
Common Retained available holders'
stock earnings for sale equity
- ---------------------------------------------------------------------------------------------------------------
Balance at September 30, 1993, as
originally reported $1,323,623 3,891,486 -- 5,215,109
Adjustment (note 1) -- 110,400 -- 110,400
--------- --------- ------- ---------
Balance at September 30, 1993 1,323,623 4,001,886 -- 5,325,509
Exercise of options for 1,725 shares
of common stock at $10 per share
(note 10) 17,250 -- -- 17,250
Unrealized appreciation on investment
securities available for sale (note 2) -- -- 198,363 198,363
Dividends ($.33125 per share) -- (57,333) -- (57,333)
Net earnings for 1994 -- 359,681 -- 359,681
--------- --------- ------- ---------
Balance at September 30, 1994 1,340,873 4,304,234 198,363 5,843,470
Net change in unrealized appreciation
on investment securities available
for sale (note 2) -- -- 92,518 92,518
Dividends ($.3625 per share) -- (63,158) -- (63,158)
Net earnings for 1995 -- 337,648 -- 337,648
--------- --------- ------- ---------
Balance at September 30, 1995 1,340,873 4,578,724 290,881 6,210,478
Exercise of options for 1,725 shares of
common stock at $10 per share (note 10) 17,250 -- -- 17,250
Net change in unrealized appreciation
on investment securities available for
sale (note 2) -- -- 39,349 39,349
Dividends ($.40 per share) -- (70,380) -- (70,380)
Net earnings for 1996 -- 236,181 -- 236,181
--------- --------- ------- ---------
Balance at September 30, 1996 $1,358,123 4,744,525 330,230 6,432,878
========== ========= ======= =========
See accompanying notes to consolidated financial statements.
[Photographs of scenes from Shelby County life across top border of page.]
Consolidated Statements
of Cash Flows
For the years ended September 30,
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 236,181 337,648 359,681
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 110,761 79,300 89,538
Net deferred loan origination fees (8,117) (15,808) (5,329)
Deferred income taxes (155,846) 14,000 (49,000)
Provision for loan losses 100,000 55,000 66,000
Real estate owned losses -- -- 11,119
(Gain) loss on disposal of premises and equipment -- 24,999 (7,950)
(Increase) decrease in accrued interest receivable on
investment securities (36,223) 13,770 (32,151)
(Increase) decrease in other assets 26,733 (96,356) 141,345
Increase in other liabilities 540,661 64,788 110,834
Loss on sale of collateralized mortgage obligation -- -- 8,272
Gain on sale of government trust mutual fund -- -- (34,413)
Gain on sale of securities available for sale (28,445) (4,947) --
----------- ---------- ----------
Net cash provided by operating activities 785,705 472,394 657,946
----------- ---------- ----------
Cash flows from investing activities:
Loans funded net of collections (15,838,914) (7,494,460) (1,546,312)
Investment in real estate owned, net -- -- 3,445
Proceeds from sale of government trust mutual fund -- -- 2,138,795
Proceeds from sale of collateralized mortgage obligation -- -- 7,085,791
Proceeds from sale of securities available for sale 5,951,760 4,435,762 --
Proceeds from sale of real estate owned -- -- 237,162
Principal collected on mortgage-backed securities 962,264 546,872 294,162
Investment in government trust mutual fund -- -- (81,895)
Investment in securities (8,033,069) (3,501,969) (7,339,462)
Investment in FHLB stock (210,800) -- (32,600)
Purchase of premises and equipment (37,645) (845,876) (389,827)
Disposals of premises and equipment -- 1 91,234
----------- ---------- ----------
Net cash provided (used) in investing activities (17,206,404) (6,859,670) 460,493
----------- ---------- ----------
Cash flows from financing activities:
Dividends paid on common stock (70,380) (60,980) (42,088)
Net increase (decrease) in deposits 4,084,063 10,134,020 (2,923,909)
Proceeds from FHLB advances and other borrowings 10,081,000 -- --
Repayments of FHLB advances and other borrowings (9,640) -- --
Proceeds from issuance of common stock through stock
option plan 17,250 -- 17,250
----------- ---------- ----------
Net cash provided (used) by financing activities 14,102,293 10,073,040 (2,948,747)
----------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (2,318,406) 3,685,764 (1,830,308)
Cash and cash equivalents at beginning of year 7,241,682 3,555,918 5,386,226
----------- ---------- ----------
Cash and cash equivalents at end of year $ 4,923,276 7,241,682 3,555,918
============ ========= =========
Supplemental cash flow information:
Interest paid $ 3,320,806 2,282,351 2,139,754
============ ========= =========
Income taxes paid $ 80,000 345,900 282,984
============ ======= =======
See accompanying notes to consolidated financial statements.
[Photographs of scenes from Shelby County life across top border of page.]
Notes
to Consolidated Financial Statements
of Shelby County Bancorp and Subsidiary -
September 30, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Shelby County
Bancorp (the "Corporation") and its wholly-owned subsidiary, Shelby County
Savings Bank, FSB and subsidiaries (the "Savings Bank"). All significant
intercompany balances and transactions are eliminated in consolidation.
The Savings Bank offers retail deposit and lending services through its
office and banking center in Shelbyville, Indiana and branches in Shelbyville,
Morristown and St. Paul, Indiana. The Savings Bank is subject to competition
from other financial institutions and is regulated by certain federal agencies
and undergoes periodic examinations by those regulatory authorities.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet
and revenues and expenses for the period. Actual results could differ from those
estimates.
Securities Held to Maturity and Available for Sale
Securities classified as available for sale are securities that the
Corporation intends to hold for an indefinite period of time, but not
necessarily until maturity, and include securities that management might use as
part of its asset-liability strategy, or that may be sold in response to changes
in interest rates, changes in prepayment risk, the need to increase regulatory
capital or other similar factors, and which are carried at market value.
Unrealized holding gains and losses, net of tax, on available for sale
securities are reported as a net amount in a separate component of shareholders'
equity until realized.
Securities classified as held to maturity are securities that the
Corporation has both the ability and positive intent to hold to maturity and are
carried at cost adjusted for amortization of premium or accretion of discount.
Gains and losses are computed on a specific identification basis.
Loans Receivable and Real Estate Owned
Loans receivable are considered long-term investments and, accordingly, are
carried at historical cost. The Savings Bank has a mortgage lien on all real
estate on which mortgage, participation or purchased loans are made.
Substantially all loan originations are secured by mortgages on property in
Shelby County, Indiana.
An allowance for interest accrued but uncollected is established once a
loan is 90 days delinquent, in process of foreclosure or is otherwise considered
to be uncollectible as determined by management.
The Bank provides specific valuation allowances for estimated losses on
loans and real estate owned when a significant and permanent decline in value
occurs. As of October 1, 1995, the Bank adopted Statement of Financial
Accounting Standard No. 114, "Accounting by Creditor for Impairment of a Loan".
Under this standard, loans considered to be impaired are reduced to the present
value of expected future cash flows or to fair value of collateral by allocating
a portion of the allowance for loan losses to such loans. If these allocations
cause the allowance for loan losses to require an increase, allocations are
considered in relation to the overall adequacy of the allowance for loan losses
and subsequent adjustment to the loss provision. Adopting this standard did not
have an impact on the 1996 financial statements. In providing valuation
allowances, through a charge to operations, the estimated net realizable value
of the underlying collateral and the costs of holding real estate are
considered. Non-specific valuation allowances for estimated losses are
established based on management's judgment of current economic conditions and
the credit risk of the loan portfolio and real estate owned.
Management believes the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions and borrower circumstances. In addition, various regulatory agencies,
as an integral part of their examination process, periodically review the Bank's
allowance for loan losses. Such agencies may require the Bank to recognize
additions to the allowance based on their judgments about information available
to them at the time of their examination.
[Photographs of scenes from Shelby County life across top border of page.]
Real estate properties acquired through, or in lieu of, loan foreclosure
are to be sold and are initially recorded at fair value at the date of
foreclosure establishing a new cost basis. After foreclosure, valuations are
periodically performed by management and the real estate is carried at the lower
of carrying amount or fair value less cost to sell.
Loan Fees
Loan origination fees and certain direct costs are deferred and recognized
over the lives of the related loans as an adjustment of the loan's yield.
FHLB Stock
Federal law requires a member institution of the Federal Home Loan Bank
system to hold common stock of its district FHLB according to a predetermined
formula. This investment is stated at cost, which represents redemption value,
and may be pledged to secure FHLB advances.
Premises and Equipment
Purchases of premises and equipment and expenditures which materially
extend useful lives are capitalized at cost. Depreciation is provided on a
straight-line basis over the estimated useful lives of the related assets as
follows: 2 to 50 years for buildings and improvement and 2 to 20 years for
furniture and equipment.
Federal Income Taxes
The Corporation and the Savings Bank file consolidated tax returns.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
in effect for the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
[PHOTOGRAPH OF A CAR.]
Cash and Cash Equivalents
For purposes of reporting cash flows, the Corporation considers cash on
hand and at banks and liquid money market investments of less than three months
maturity to be cash equivalents.
Earnings Per Share
Earnings per share have been computed on the basis of weighted average
number of common shares outstanding and the dilutive effect of stock options not
exercised using the treasury stock method. The weighted average number of shares
for use in the primary earnings per share computation was 179,605 for 1996,
174,225 for 1995 and 172,769 for 1994. The effects of outstanding stock options
on fully diluted earnings per share were dilutive by less than three percent for
1996, 1995 and 1994.
Restatement
During 1996, the Company determined that it had not properly accrued
interest income on certain loans in prior years. Accordingly, an adjustment to
prior periods has been recorded to properly reflect the accrued income. The
adjustment recorded as of September 30, 1993, consists of additional accrued
interest on mortgage loans of $184,000, and additional taxes payable of $73,600,
resulting in an increase in beginning shareholders' equity of $110,400. The
impact on net income for the years ended September 30, 1995 and 1994 was
determined by management not to be material.
Reclassifications
Certain amounts in the 1995 and 1994 consolidated financial statements have
been reclassified to conform with the 1996 presentation.
[Photographs of scenes from Shelby County life across top border of page.]
(2) Investment Securities Available for Sale
Investment securities available for sale at September 30, consist of the
following:
September 30, 1996
Amortized Unrealized Unrealized Market
cost gains losses value
- -------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
FNMA $2,907,950 2,986 (72,473) 2,838,463
FHLMC 1,792,181 2,735 (50,242) 1,744,674
--------- ------- -------- ---------
4,700,131 5,721 (122,715) 4,583,137
--------- ------- -------- ---------
FHLMC preferred stock 30,691 748,991 -- 779,682
--------- ------- -------- ---------
Corporate bonds:
Due after one year through
five years 508,235 -- (20,120) 488,115
Due after five years through
ten years 1,009,184 -- (50,837) 958,347
--------- ------- -------- ---------
1,517,419 -- (70,957) 1,446,462
--------- ------- -------- ---------
Municipal bonds:
Due after five years through
ten years 445,131 -- (10,656) 434,475
--------- ------- -------- ---------
$6,693,372 754,712 (204,328) 7,243,756
========== ======= ======== =========
September 30, 1996
Amortized Unrealized Unrealized Market
cost gains losses value
- -------------------------------------------------------------------------------------------------------
Banker's acceptances:
Due in one year or less $ 632,611 -- -- 632,611
---------- ------- ------- ---------
Mortgage-backed securities:
FNMA 2,044,226 -- (13,179) 2,031,047
FHLMC 818,779 -- (10,920) 807,859
---------- ------- ------- ---------
2,863,005 -- (24,099) 2,838,906
---------- ------- ------- ---------
FHLMC preferred stock 30,691 504,116 -- 534,807
---------- ------- ------- ---------
Municipal bonds:
Due after five years through ten
years 438,757 4,784 -- 443,541
---------- ------- ------- ---------
$3,965,064 508,900 (24,099) 4,449,865
========== ======= ======= =========
A reclassification of investment securities from the held to maturity
portfolio to the available for sale portfolio occurred during the quarter ended
December 31, 1995, in accordance with the FASB Special Report, A Guide to
Implementation of Statement 115 on Accounting for Certain Investment in Debt and
Equity Securities, which was issued November 15, 1995. The investment securities
that were reclassified had a carrying value of $1,521,922 and a market value of
$1,550,360 at the time of transfer.
For the year ended September 30, 1996, gross realized gains on sales of
investment securities available for sale were $28,445 and are included in other
non-interest income.
[Photographs of scenes from Shelby County life across top border of page.]
(3) Investment Securities Held to Maturity
Investment securities held to maturity at September 30, consist of:
September 30, 1996
Amortized Unrealized Unrealized Market
cost gains losses value
- ----------------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
FNMA $ 199,678 2,380 - 202,058
FHLMC 400,373 2,851 (3,672) 399,552
GNMA 33,039 2,834 - 35,873
----------- ------ ------ ---------
633,090 8,065 (3,672) 637,483
----------- ------ ------ ---------
Municipal bonds:
Due after five years through ten years 226,672 1,703 (4,345) 224,030
----------- ------ ------ ---------
Corporate bonds:
Due after one year through five years 407,686 6,518 - 414,204
----------- ------ ------ ---------
$ 1,267,448 16,286 (8,017) 1,275,717
=========== ====== ====== =========
September 30, 1995
Amortized Unrealized Unrealized Market
cost gains losses value
- ----------------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
FNMA $ 701,931 7,529 - 709,460
FHLMC 1,048,784 8,990 - 1,057,774
GNMA 39,518 3,288 - 42,806
----------- ------ ------ ---------
1,790,233 19,807 - 1,810,040
----------- ------ ------ ---------
Municipal bonds:
Due after five years through ten years 113,927 2,197 - 116,124
----------- ------ ------ ---------
Corporate bonds:
Due after one year through five years 926,805 21,299 - 948,104
----------- ------ ------ ---------
$ 2,830,965 43,303 - 2,874,268
=========== ====== ====== =========
[PHOTOGRAPH OF A MAN EATING CORN ON THE COB.]
[Photographs of scenes from Shelby County life across top border of page.]
(4) Loans Receivable
Loans receivable at September 30, 1996 and 1995, respectively, consist of:
1996 1995
- ----------------------------------------------------------------------
Real estate mortgage loans:
One-to-four family $ 40,697,356 33,594,087
Commercial 9,828,050 7,574,423
Home equity loans 740,433 586,276
Residential construction 1,002,262 582,924
Participations purchased:
One-to-four family 5,430 13,405
Commercial 2,770,483 1,157,879
Consumer loans 8,257,929 5,234,750
Commercial loans 3,320,574 2,303,419
------------ ----------
66,622,517 51,047,163
Less:
Deferred loan fees 198,195 206,312
Allowance for loan losses 325,900 241,094
------------ ----------
$ 66,098,422 50,599,757
============ ==========
Activity in the allowance for loan losses for the years ended September
30, consist of:
1996 1995 1994
--------- --------- ---------
Balance at beginning of year $ 241,094 188,879 140,998
Provision charged to earnings 100,000 55,000 66,000
Charge-offs (15,523) (2,785) (20,947)
Recoveries 329 -- 2,828
--------- ------- -------
Balance at end of year $ 325,900 241,094 188,879
========= ======= =======
At September 30, 1996 and 1995, non-accrual loans totaled $299,649 and $453,543,
respectively.
[Photograph of scene from Shelby County life.]
The Savings Bank makes loans to certain directors and officers in the normal
course of business. These loans are made on substantially the same terms,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with other customers and do not involve more than the
normal risk of collectibility. A summary of activity in these loans for the year
ended September 30, 1996 follows:
Balance at beginning of year $ 579,267
New loans 777,983
Repayments (360,995)
Balance at end of year $ 996,255
At September 30, 1996, the Savings Bank had commitments to originate $2,305,000
of fixed-rate loans. The interest rates on these fixed-rate loan commitments
range from 8.75% to 10.5%. The Savings Bank also had commitments to fund
$546,771 of variable-rate home equity loans.
(5) Premises and Equipment
Premises and equipment consist of:
1996 1995
- ---------------------------------------------------------------------------
Land $ 251,766 251,766
Buildings and improvements 1,315,069 1,315,069
Furniture and equipment 971,877 934,232
----------- ---------
2,538,712 2,501,067
Less accumulated depreciation 664,010 535,948
----------- ---------
$ 1,874,702 1,965,119
=========== =========
[PHOTOGRAPH OF GIRL EATING ICE CREAM AND PHOTOGRAPH OF A BASKETBALL GAME.]
[Photographs of scenes from Shelby County life across top border of page.]
(6) Deposits
Deposits at September 30, consist of:
1996 1995
--------------------------- ----------------------------
Amount % Amount %
- ----------------------------------------------------------------------------------------------------------------
Passbook accounts (2.85% and
3.25% at September 30, 1996 and 1995) $10,027,894 15% 9,926,911 16%
NOW and Super NOW (2.00% and
2.50% at September 30, 1996 and
2.5% at September 30, 1995) 13,532,702 21 11,916,467 20
---------- --- ---------- --
23,560,596 36 21,843,378 36
---------- --- ---------- --
Certificate accounts:
Up to 3% 58,945 -- 29,218 --
3.01%-4% 431,614 1 2,708,191 5
4.01%-5% 4,884,518 7 4,249,932 7
5.01%-6% 21,169,641 33 11,141,366 18
6.01%-7% 11,936,295 18 17,964,549 29
7.01%-8% 1,951,528 3 1,874,443 3
8.01%-9% 1,293,000 2 1,390,997 2
---------- --- ---------- --
41,725,541 64 39,358,696 64
---------- --- ---------- --
$65,286,137 100% 61,202,074 100%
=========== === ========== ===
Weighted average cost of
all deposits 4.75% 4.99%
==== ====
Included in certificates at September 30, 1996 and 1995 are $4,737,000 and
$6,610,000, respectively, in certificates of $100,000 or more.
Eligible deposit accounts are insured by the full faith and credit of the
government up to $100,000 under the Federal Deposit Insurance Corporation's
Savings Association Insurance Funds (SAIF) at September 30, 1996.
The contractual maturities of certificates at September 30, 1996 consist of (in
thousands of dollars):
Amount %
- ---------------------------------------------------------------------
Under 12 months $ 19,403,870 46.5%
12 to 24 months 6,595,570 15.8
24 to 36 months 2,584,150 6.2
36 to 48 months 10,641,585 25.5
48 to 60 months 2,248,928 5.4
Over 60 months 251,438 .6
------------ -----
$ 41,725,541 100.0%
============ =====
Interest expense by type of deposit for the years ended September 30,
consist of:
Account Type 1996 1995 1994
- ---------------------------------------------------------------
Passbook $ 313,341 376,473 485,854
NOW and Super NOW 301,579 311,926 275,955
Certificates 2,604,553 1,707,790 1,375,774
--------- --------- ---------
$3,219,473 2,396,189 2,137,583
========== ========= =========
(7) Advances From FHLB and Other Borrowings
Advances from FHLB and other borrowings at September 30, 1996 consist of:
Advances from FHLB with interest at variable rates (6.48% at September 30, 1996)
collateralized by qualifying mortgage loans and investments (as defined) equal
to 160% of FHLB advances $ 9,746,000
Mortgage borrowing secured by bank branch
with monthly payments of principal and
interest at 8.75% through October 2010 325,360
----------
10,071,360
==========
The weighted average interest rate of all borrowings was 6.55% at September 30,
1996.
Advances from FHLB and other borrowings at September 30, 1996 are scheduled
to mature as follows:
FHLB Other
Advances Borrowings Total
- -------------------------------------------------------------------------
1997 $9,746,000 12,264 9,758,264
1998 -- 13,382 13,382
1999 -- 14,601 14,601
2000 -- 15,931 15,931
2001 -- 17,382 17,382
Thereafter -- 251,800 251,800
---------- ------- ----------
$9,746,000 325,360 10,071,360
========== ======= ==========
[Photographs of scenes from Shelby County life across top border of page.]
(8) Income Taxes
The composition of income taxes for the years ended September 30, consist of:
1996 1995 1994
- ------------------------------------------------------
Current:
Federal $ 228,946 121,200 210,000
State 61,000 61,000 48,000
--------- ------- -------
289,946 182,200 258,000
Deferred (155,846) 14,000 (49,000)
--------- ------- -------
$ 134,100 196,200 209,000
========= ======= =======
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at September 30 follow:
1996 1995
- ------------------------------------------------------------------------
Deferred tax assets:
Deferred loan fees $ 79,300 82,500
Allowance for delinquent interest 9,800 7,800
Allowance for possible loan losses for
financial reporting purposes 110,800 96,400
SAIF special assessment 132,800 --
Allowance for environmental contingency 18,300 18,300
--------- --------
351,000 205,000
========= ========
Deferred tax liabilities:
FHLB stock dividend (29,200) (29,200)
Depreciation (29,200) (3,200)
Tax bad debt reserve (51,600) (41,500)
Deductible prepaid expense (25,800) (21,900)
Investment securities available for sale (220,154) (193,920)
--------- --------
(355,954) (289,720)
--------- --------
Net temporary differences (4,954) (84,720)
Less valuation allowance -- (49,846)
--------- --------
Net deferred tax liability $ (4,954) (134,566)
========= ========
The effective income tax rate differs from the statutory federal
corporate rate as follows:
1996 1995 1994
- ------------------------------------------------------------------
Statutory tax rate 34.0% 34.0% 34.0%
State income taxes 5.6 5.6 5.6
Tax exempt interest income (3.5) (3.2) (2.6)
Other .1 .4 (.2)
---- ---- ----
Effective tax rate 36.2% 36.8% 36.8%
==== ==== ====
Under the Internal Revenue Code, the Savings Bank is allowed a special bad
debt deduction for additions to tax bad debt reserves established for the
purpose of absorbing losses. Subject to certain limitations, the allowable bad
debt deduction is computed based on one of two alternative methods: (1) a
percent of taxable income before such deduction (currently 8%) or (2) loss
experience method. The Savings Bank has generally computed its annual addition
to its tax bad debt reserves using the percentage of taxable income method.
Under Legislation enacted in 1996, beginning in fiscal 1997, the Savings
Bank will no longer be allowed a special bad debt deduction using the percentage
of taxable income method. Beginning in 1997, the Savings Bank will be required
to recapture its excess tax bad debt reserve over its 1987 base year reserve
over a six-year period. This amount has been provided for in the Savings Bank's
deferred tax liability.
Retained earnings at September 30, 1996 include approximately $1,100,000
for which no provision for Federal income taxes has been made. This amount
represents allocations of earnings to tax bad debt deductions prior to 1987.
Reduction of amounts so allocated for purposes other than tax bad debt losses
will create taxable income, which will be subject to the then current corporate
income tax rate. It is not contemplated that amounts allocated to bad debt
deductions will be used in any manner to create taxable income.
(9) Retirement Plan
The Savings Bank maintains a noncontributory defined benefit retirement
plan which covers substantially all employees. Pension expense amounted to
$39,521, $29,423 and $17,039 for the years ended September 30, 1996, 1995 and
1994. The Plan in which the Savings Bank participates is a multi-employer plan
for which separate actuarial valuations are not made with respect to each
employer.
[Photographs of scenes from Shelby County life across top border of page.]
(10) Stockholders' Equity
The Corporation is subject to regulation as a savings and loan holding
company by the Office of Thrift Supervision ("OTS"). The Savings Bank, as a
subsidiary of a savings and loan holding company, is subject to certain
restrictions in its dealings with the Corporation. The Savings Bank is further
subject to the regulatory requirements applicable to a federal savings bank.
Savings institutions are required to maintain risk-based capital of 8.0% of
risk-weighted assets. At September 30, 1996, the Savings Bank's risk-based
capital exceeded the required amount. Risk-based capital is defined as the
Savings Bank's core capital adjusted by certain items. Risk weighting of assets
is derived from assigning one of four risk-weighted categories to an
institution's assets, based on the degree of credit risk associated with the
asset. The categories range from zero percent for low-risk assets (such as
United States Treasury securities) to 100% for high-risk assets (such as real
estate owned). The book value of each asset is then multiplied by the risk
weighting applicable to the asset category. The sum of the products of the
calculation equals total risk-weighted assets.
Savings institutions are also required to maintain a minimum leverage ratio
under which core capital must equal at least 3% of total assets, but no less
than the minimum required by the Office of the Comptroller of the Currency
("OCC") for national banks, which minimum currently stands between 4% and 5% for
other than the highest rated institutions. The Savings Bank's primary regulator,
the Office of Thrift Supervision, is expected to adopt the OCC minimum. The
components of core capital are the same as those set by the OCC for national
banks, and consist of common equity plus non-cumulative preferred stock and
minority interests in consolidated subsidiaries, minus certain intangible
assets. At September 30, 1996, the Savings Bank's core capital and leverage
ratio were in excess of the required amount.
Savings institutions must also maintain minimum tangible capital of 1.5% of
total assets. The Savings Bank's tangible capital and tangible capital ratio at
September 30, 1996 exceeded the required amount.
The OTS has minimum capital standards that place savings institutions into
one of five categories, from "critically undercapitalized" to
"well-capitalized," depending on levels of three measures of capital. A well
capitalized institution as defined by the regulations has a total risk-based
capital ratio of at least 10 percent, a Tier 1 (core) risk-based capital ratio
of at least six percent, and a leverage (core) risk-based capital ratio of at
least five percent. At September 30, 1996, the Savings Bank was classified as
adequately capitalized.
The OTS has regulations governing dividend payments, stock redemptions, and
other capital distributions, including upstreaming of dividends by a savings
institution to a holding company. Under these regulations, the Savings Bank may,
without prior OTS approval, make capital distributions to the Corporation of up
to 100% of its net income during the calendar year, plus an amount that would
reduce by half its excess capital over its fully phased-in capital requirement
at the beginning of the calendar year. The Corporation is not subject to any
regulatory restrictions on the payments of dividends to its stockholders, other
than restrictions under Indiana law.
[PHOTOGRAPH OF A FAMILY]
At the time of conversion, October 17, 1991, the Savings Bank established a
liquidation account of $3,348,000 which equaled the Savings Bank's retained
earnings as of the date of the latest statement of financial condition, June 30,
1991, contained in the final offering circular. The liquidation account will be
maintained for the benefit of depositors, as of the eligibility record date, who
continue to maintain their deposits in the Savings Bank after conversion. In the
event of a complete liquidation (and only in such event), each eligible
depositor will be entitled to receive a liquidation distribution from the
liquidation account, in the proportionate amount to the then current adjusted
balance for deposits then held, before any liquidation distribution may be made
with respect to the shareholders. Except for the repurchase of stock and payment
of dividends by the Savings Bank, the existence of the liquidation account does
not restrict the use or application of such retained earnings.
The Corporation has a stock option plan whereby 17,250 shares of authorized
but unissued common stock are reserved for future issuance upon the exercise of
stock options. Stock options for the purchase of 12,075 shares have been granted
to certain officers and directors at $10 per share, the market value at the date
of approval of the plan. The options can be exercised at any time until
expiration in October 2001. Additionally, stock options for the purchase of
[Photographs of scenes from Shelby County life across top border of page.]
3,450 shares were granted in 1996 to certain officers and directors at $20 per
share, the market value at the date the options were granted. The options can be
exercised at any time until expiration in August of 2006. During 1994, options
for 1,725 shares were exercised. No options were exercised in 1995. During 1996,
options for 1,725 shares were exercised leaving 12,075 unexercised options at
September 30, 1996.
In April 1995, the Corporation issued to its shareholders one Common Share
Purchase Rights (the Rights) for each share of common stock owned. The Rights
entitle the shareholders to purchase one share of common stock for $70.
(11) Parent Company Financial Information
Following is condensed parent company financial information of the Corporation:
Condensed Statement of Financial Condition
Assets 1996 1995
- -------------------------------------------------------------------------------------
Cash, including interest-bearing deposit of $345,287 $ 378,342 36,001
Investment in Savings Bank 5,585,782 5,261,093
Due from Savings Bank for income taxes and
proceeds from issuance of common stock 61,300 135,225
Premises and equipment, net 830,859 853,676
Other receivables -- 25
---------- ---------
$6,856,283 6,286,020
========== =========
Liabilities
- -------------------------------------------------------------------------------------
Due to Savings Bank for compensation expense 80,448 58,119
Long-term debt 325,360 --
Dividends payable 17,597 17,423
---------- ---------
423,405 75,542
---------- ---------
Shareholders' Equity
Common stock 1,358,123 1,340,873
Retained earnings 4,744,525 4,578,724
Unrealized appreciation on investment securities
available for sale held by Savings Bank 330,230 290,881
---------- ---------
6,432,878 6,210,478
---------- ---------
$6,856,283 6,286,020
========== =========
Condensed Statement of Earnings
1996 1995 1994
--------- --------- ---------
Dividend from Savings Bank $ -- 750,000 300,000
Lease income 49,500 21,000 --
Interest income 10,646 1,647 1,132
Interest expense on loans (26,212) -- --
Operating expenses (108,393) (78,750) (63,928)
--------- --------- ---------
(74,459) 693,897 237,204
Income tax benefit 25,300 36,000 35,000
--------- --------- ---------
Income (loss) before equity in undistributed
earnings of Savings Bank (49,159) 729,897 272,204
Equity in undistributed earnings of Savings Bank 285,340 (392,249) 87,477
--------- --------- ---------
Net earnings $ 236,181 337,648 359,681
========= ======= =======
[PHOTOGRAPH OF A CHURCH.]
[Photographs of scenes from Shelby County life across top border of page.]
Condensed Statement of Cash Flows
1996 1995 1994
- --------------------------------------------------------------------------------------------------
Net cash flows from operating activities:
Net earnings $ 236,181 337,648 359,681
Adjustments to reconcile net cash
provided by operating activities:
Equity in undistributed earnings of Savings Bank (285,340) 392,249 (87,477)
Depreciation and amortization 22,817 3,803 --
(Increase) decrease in due from Savings Bank 73,925 (36,000) (52,225)
(Increase) decrease in other receivables 25 -- (25)
Increase in other liabilities 22,503 36,438 21,681
--------- ------- -------
Net cash provided by operating activities 70,111 734,138 241,635
--------- ------- -------
Cash flows from investing activities -
Purchase of premises and equipment -- (685,439) (172,040)
--------- ------- -------
Net cash used by investing activities -- (685,439) (172,040)
--------- ------- -------
Cash flows from financing activities:
Proceeds from borrowings 335,000 -- --
Repayment of borrowings (9,640) -- --
Net proceeds from issuance of common stock 17,250 -- 17,250
Dividends paid to shareholders (70,380) (60,980) (42,088)
--------- ------- -------
Net cash provided (used) by financing
activities 272,230 (60,980) (24,838)
--------- ------- -------
Net increase (decrease) in cash 342,341 (12,281) 44,757
Cash and cash equivalents at beginning of year 36,001 48,282 3,525
Cash and cash equivalents at end of year $ 378,342 36,001 48,282
========= ====== ======
Supplemental cash flow information -
Interest paid $ 26,212 -- --
========= ====== ======
(12) Recent Regulatory Developments
The deposits of the Savings Bank are presently insured by the Savings
Association Insurance Fund (SAIF), which together with the Bank Insurance Fund
(BIF), which insures the deposits of commercial banks, are the two deposit
insurance funds administered by the Federal Deposit Insurance Corporation
(FDIC). The Deposit Insurance Funds Act, enacted on September 30, 1996, requires
the FDIC to assess a special one-time premium on deposits insured by SAIF to
raise the ratio of SAIF insurance funds to insured deposits to 1.25%. The
Savings Bank was assessed an additional premium of $332,077 payable prior to
November 27, 1996. As a reslut of this legislation, the Savings Bank's deposit
insurance premiums will be reduced.
[Photographs of scenes from Shelby County life across top border of page.]
(13) Fair Value of Financial Instruments
The following disclosure of fair value information is made in accordance
with the requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Instruments." SFAS No. 107 requires
disclosure of fair value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to estimate value.
The estimated fair value amounts have been determined by the Corporation using
available market information and other appropriate valuation techniques. These
techniques are significantly affected by the assumptions used, such as the
discount rate and estimates of future cash flows. Accordingly, the estimates
made herein are not necessarily indicative of the amounts Shelby County Bancorp
could realize in a current market exchange and the use of different market
assumptions and/or estimation methods may have a material effect on the
estimated fair value amount.
The following schedule includes the book value and estimated fair value of
all financial assets and liabilities, as well as certain off balance sheet
items, at September 30, 1996.
Carrying Estimated
(In thousands) amount fair value
- --------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 4,923 4,923
Securities including securities available for sale 8,511 8,520
Loans receivable, net 66,098 65,563
Accrued interest receivable 529 529
Stock in FHLB of Indianapolis 620 620
Liabilities
- --------------------------------------------------------------------------------
Deposits 65,286 66,150
Borrowings:
FHLB advances 9,746 9,746
Long-term borrowing 325 325
Accrued interest payable 133 133
The following valuation methods and assumptions were used by the
Corporation in estimating the fair value of its financial instruments.
[PHOTOGRAPH OF BARNS]
Cash and Cash Equivalents.
The fair value of cash and cash equivalents approximates carrying value.
Securities.
Fair values are based on quoted market prices.
Loans Receivable, Net.
The fair value of loans is estimated by discounting the estimated future
cash flows using market rates at which similar loans would be made to borrowers
with similar credit ratings and for the same remaining maturities. Contractual
cash flows were adjusted for prepayment estimates consistent with those used by
the Office of Thrift Supervision at September 30, 1996.
Accrued Interest Receivable.
The fair value of these financial instruments approximates carrying value.
Stock in FHLB of Indianapolis.
Fair value of FHLB stock is based on the price at which it may be resold to
the FHLB.
Deposits.
The fair values for demand deposits (i.e., interest bearing and
non-interest bearing checking, passbooks savings and money market accounts) are
equal to the amount payable on demand at the reporting date. Fair values for
fixed-maturity certificates of deposit are calculated using a discounted cash
flow analysis that applies interest rates currently offered on certificates.
FHLB Advances.
The fair values of the FHLB advances approximate carrying values as the
interest rates are variable and adjust to market rates.
Long-term Borrowing.
The fair value of long-term borrowing approximates carrying value as the
interest rate approximates current market rates.
Accrued Interest Payable.
The fair value of these financial instruments approximates carrying value.
[Photographs of scenes from Shelby County life across top border of page.]
Directors and Officers
Directors
David A. Carmony has been President and a 50% shareholder of Carmony-Ewing
Funeral Homes, Inc., which provides funeral services in the Shelby County area,
since 1988. Prior to 1988, Mr. Carmony owned and operated Carmony Funeral Home,
Incorporated, a similar business.
Leonard J. Fischer has been a director of Shelby County Bancorp since the
Conversion and a director of SCSB since 1975. He is a self- employed metal
fabricator. Prior to 1986, Mr. Fischer was manager of plants and equipment for
Shelby Steel, Inc.
Rodney L. Meyerholtz has been President and a director of Shelby County Bancorp
since the Conversion and President and director of SCSB since 1986.
James M. Robison became a director and Chairman of the Board of Directors of
Shelby County Bancorp and SCSB in 1991, and has served as legal counsel to SCSB
since prior to 1986. Mr. Robison is a member of the Shelbyville law firm of
Robison , Yeager, Good, Baldwin and Apsley P.A.
Robert E. Thomas became a director of Shelby County Bancorp and SCSB in 1995.
Mr. Thomas has served as a general agent for the past 45 years for the Franklin
Life Insurance Company.
[PHOTOGRAPH OF DIRECTORS OF SHELBY COUNTY BANCORP -
Shelby County Bancorp Directors, left to right: David A. Carmony, Leonard J.
Fischer, James M. Robison, Rodney L. Meyerholtz, Robert E. Thomas]
Officers
Officers of Shelby County Bancorp
James M. Robison
Chairman of the Board
Rodney L. Meyerholtz
President
Leonard J. Fischer
Vice President
David A. Carmony
Secretary
Robert E. Thomas
Treasurer
Officers of Shelby County Savings Bank, FSB
Rodney L. Meyerholtz
President
Ronald L. Lanter
Vice President-Consumer Lending
Joyce E. Ford
Vice President-Mortgage Lending
Rita A. Sturgill
Vice President-Treasurer
Betty J. Baker
Secretary
Brenda L. Coers
Assistant Secretary
Totally Committed to Shelby County
Shareholder Information
Market Information
The common stock of Shelby County Bancorp is traded in the over-the-counter
market but is not listed on NASDAQ. NatCity Investments, Indianapolis, Indiana,
acts as a market maker for the stock.
Transfer Agent and Registrar
Registrar and Transfer Company is Shelby County Bancorp's stock transfer agent
and registrar. Registrar and Transfer maintains the Corporation's shareholder
records. To change name, address or ownership of stock, to report lost
certificates, or to consolidate accounts, contact:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
(800) 456-0596
General Counsel
Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, Indiana 46204
Auditors
KPMG Peat Marwick LLP
2400 First Indiana Plaza
135 North Pennsylvania Street
Indianapolis, Indiana 46204
Shareholder & General Inquiries
Shelby County Bancorp is required to file an Annual Report on Form 10-K for its
fiscal year ended September 30, 1996 with the Securities and Exchange
Commission. Copies of this Annual Report may be obtained without charge upon
written request to:
Rodney L. Meyerholtz
Shelby County Bancorp
29 East Washington Street, P.O. Box 438
Shelbyville, Indiana 46176 (317) 398-9721
Main Office
29 E. Washington Street,
PO Box 438
Shelbyville, Indiana 46176
Phone: (317) 398-9721
[PHOTOGRAPH OF SHELBY COUNTY SAVINGS BANK BRANCH]
Branch Locations
105 County Line Rd.
St. Paul, Indiana 47272
34 Rampart Street
Shelbyville, Indiana 46176
127 East Main Street
Morristown, Indiana 46161
Produced by
Russell Communications, Inc,
Lisle, Illinois
Designed by
David Johnson Design,
Oak Brook, Illinois
Photos by
Sponsel-Dillman Photography
and Brett Hampton of
The Shelbyville News
["FDIC INSURED" AND "EQUAL HOUSING LENDER" LOGOS]
A REPORT TO OUR SHAREHOLDERS