TOTALLY DEDICATED TO CUSTOMER SERVICE
1997
ANNUAL
REPORT
[SHELBY COUNTY BANCORP LOGO]
A REPORT TO OUT SHAREHOLDERS
[COVER FEATURES PHOTOGRAPHS OF DAILY ACTIVITIES AT SHELBY COUNTY SAVINGS BANK]
1997
The recently completed fiscal year 1997 was your institution's 60th year of
providing financial service to the residents of Shelby County. I am very pleased
to report that the past year was the most profitable year ever for Shelby County
Bancorp.
Throughout the year, we emphasized the bank's total commitment to customer
service. By offering modern, competitive, convenient products and services in a
friendly, efficient manner, our employees helped us to maintain excellent
relationships with our customers while adding many new deposit and lending
accounts for the bank. These factors helped our institution prosper in a
competitive environment filled with out of market institutions, and helped
increase prosperity for Shelby County and our shareholders.
During the year the bank's two newest offices, Rampart Street and Morristown,
continued to grow, serving the financial needs of additional customers.
Meanwhile, we developed plans to further enhance performance at those
facilities, along with our downtown Shelbyville and St. Paul locations, and the
institution as a whole. New strategies include an employee compensation
incentive program implemented to help maximize and reward performance. The plans
developed by the Directors and Management of your ins titution during fiscal
year 1997 will help pave the way for even greater success, profitability and
shareholder returns in the coming years.
For the fiscal year ending September 30, 1997, net income was $513,000, or $2.83
per share, an increase of 117 percent from 1996 earnings of $236,000, or $1.32
per share. As mentioned above, the net earnings of $513,000 represents an
all-time high amount. We believe conditions are favorable for fiscal year 1998
to be even more profitable. Total assets of the company increased 9.6 percent
from $82,676,000 at fiscal year 1996 to $90,609,000 at fiscal year 1997. Also,
book value per share increased from $36.56 at fiscal year 1996 to $40.76 at
fiscal year 1997.
Loans receivable for fiscal year 1997 increased 15 percent from $66,098,000
(fiscal year 1996) to $76,038,000. Total deposits for fiscal year 1997 decreased
slightly to $64,633,000 from fiscal year 1996 deposits of $65,286,000, a 1
percent drop.
Net interest income after provision for loan losses improved by $314,000 from
fiscal year 1996 to 1997. The ongoing originations of both mortgage and
non-mortgage products at record amounts have continued to increase net interest
income margins for the company, making them even stronger than the high levels
of fiscal year 1996.
[PHOTOGRAPH OF RODNEY L. MEYERHOLTZ]
Non-performing assets for fiscal year 1997 remained at levels significantly
below industry norms. The company's loan underwriting and collection policies,
along with a healthy economy, are major contributors to keeping these levels
low.
We look forward to 1998 as we continue to provide safe and sound institutional
philosophies and values. Meanwhile, we are constantly searching for
opportunities that are beneficial to our customers and shareholders.
As always, your comments and suggestions on how we may better serve you are
welcome.
/s/ Rodney L. Meyerholtz
Rodney L. Meyerholtz
President and Chief Executive officer
["SHELBY COUNTY BANCORP" appears in the corner of every odd numbered page]
[PHOTOGRAPH OF DRIVE-THRU SERVICE]
TABLE OF CONTENTS
President's Message to Shareholders ....................................... 1
Selected Consolidated Financial Data ...................................... 3
Financial Highlights ...................................................... 5
Management's Discussion and Analysis ...................................... 6
Independent Auditors' 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 Consolidated 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 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
in Shelby County. SCSB offers a variety of retail deposits and lending services
to retail and commercial customers in Shelby County.
[PHOTOGRAPH OF BANK TRANSACTION]
["1997 ANNUAL REPORT" appears in the corner of every even numbered page]
At September 30,
(In Thousands, Except per Share Amounts) 1997 1996 1995 1994 1993
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Summary of Financial Condition:
Total assets $90,609 $82,676 $67,887 $57,123 $59,343
Loans receivable, net 76,038 66,098 50,600 43,136 41,697
Investment securities 8,695 8,511 7,281 5,470 7,403
Cash, including interest-bearing deposits 2,436 4,923 7,242 3,556 5,386
Government trust mutual fund -- -- -- -- 2,022
Investment in FHLB stock, at cost 920 620 409 409 377
Deposits 64,633 65,286 61,202 51,068 53,992
Common stock 1,358 1,358 1,341 1,341 1,324
Retained earnings-substantially restricted 5,188 4,745 4,579 4,304 4,002
Book value per share 40.76 36.56 35.65 33.54 30.87
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Year Ended September 30,
(In Thousands, Except per Share Amounts) 1997 1996 1995 1994 1993
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Summary of Operating Results:
Total interest income $ 6,708 $ 5,839 $ 4,876 $ 4,375 $ 4,506
Total interest expense on FHLB advances
and other borrowings 896 122 181 -- --
Total interest expense on deposits 2,996 3,219 2,396 2,138 2,305
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Net interest income 2,816 2,498 2,299 $ 2,237 $ 2,201
Provision for loan losses 104 100 55 66 52
Net interest income after
provision for loan losses 2,712 2,398 2,244 2,171 2,149
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Non-interest income:
Service charges and fees 249 236 197 146 153
Other 100 282 171 145 174
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Total non-interest income 349 518 368 291 327
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Non-interest expense:
Salaries and employee benefits 960 940 939 758 802
SAIF special assessment -- 332 -- -- --
Other 1,293 1,274 1,139 1,135 1,114
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Total non-interest expense 2,253 2,546 2,078 1,893 1,916
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Earnings before income taxes 808 370 534 569 560
Income taxes 295 134 196 209 228
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Net earnings $ 513 $ 236 $ 338 $ 360 $ 332
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Earnings per share $ 2.83 $ 1.32 $ 1.94 $ 2.08 $ 1.93
OF SHELBY COUNTY
BANCORP & SUBSIDIARY
Year Ended September 30,
(In Thousands, Except per Share Amounts) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
Average Balance Sheet Data:
Assets $ 85,934 $ 74,696 $ 62,536 $ 58,942 $ 56,229
Loans 72,195 58,485 47,034 41,720 42,321
Interest-bearing liabilities 79,403 68,582 54,442 53,249 50,945
Shareholders' equity (excluding unrealized
appreciation on investment securities) 6,324 6,011 5,782 5,430 5,077
Supplemental Data:
Net yield on interest-earning assets1 3.38% 3.46% 3.81% 3.91% 4.03%
Return on assets2 .60 .32 .54 .61 .59
Return on equity3 8.12 3.93 5.84 6.62 6.54
Equity-to-assets 4,5 7.91 7.78 9.00 10.04 8.79
Average interest-earning assets to average
interest-bearing liabilities 105.32 104.85 106.68 107.37 107.33
Non-performing assets to total assets5 .46 .30 .67 .95 .83
Non-performing loans to total loans5 .55 .37 .90 1.25 .69
Loan loss allowance to total loans5 .52 .49 .48 .44 .34
Loan loss allowance to non-performing loans5 .94 1.32 .53 .35 .48
Net charge-offs to average loans5 .06 .03 .01 .04 .09
Operating expenses to average assets6 2.51 3.41 3.32 3.21 3.41
Tangible capital ratio 6.32 6.40 7.30 9.20 8.70
Core capital ratio 6.32 6.40 7.30 9.20 8.70
Total risk-based capital ratio 9.50 10.30 12.30 17.54 16.80
Cash dividends per share .40 .40 .363 .331 .325
Dividend payout ratio 13.71% 29.80% 18.71% 15.93% 16.88%
Number of full service offices 4 4 4 2 2
(1) Net interest income divided by average interest-earning assets.
(2) Net income divided by average total assets.
(3) Net income divided by average total equity.
(4) Total equity divided by total assets.
(5) At end of period.
(6) Non-interest expense divided by average total assets.
[PHOTOGRAPH OF CUSTOMERS CONDUCTING BANKING TRANSACTIONS]
[PHOTOGRAPHS OF SCENIC INDIANA APPEAR ALONG TOP MARGIN OF EVERY PAGE]
FINANCIAL HIGHTLIGHTS
5 YEAR HISTORY
TOTAL ASSETS TOTAL LOANS
[BAR GRAPH REPLACED] [BAR GRAPH REPLACED]
FY93 $59,343 FY93 $41,697
FY94 $57,123 FY94 $43,136
FY95 $67,887 FY95 $50,600
FY96 $82,676 FY96 $66,098
FY97 $90,609 FY97 $76,038
NET INTEREST INCOME NON-PERFORMING ASSETS
AFTER PROVISIONG FOR TO TOTAL ASSETS
LOAN LOSSES [BAR GRAPH REPLACED]
[BAR GRAPH REPLACED]
FY93 $2,149 FY93 0.83%
FY94 $2,171 FY94 0.95%
FY95 $2,244 FY95 0.67%
FY96 $2,398 FY96 0.30%
FY97 $2,712 FY97 0.46%
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 depositinsurance 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.
[PHOTOGRAPH OF BANKING TRANSACTION]
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
$2,498,000 for the year ended September 30, 1996 to $2,816,000 for the year
ended September 30, 1997, a 12.7% increase.
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,
1997 1996 1995
Average Interest Average Interest Average Interest
(Dollars in Thousands) Balance Earned/Paid Balance Earned/Paid Balance Earned/Paid
- ------------------------------------------------------------------------------------------------------------------------------------
Interest-earning assets:
Interest-earning deposits $ 2,781 $ 108 $ 5,055 $ 234 $ 4,724 $ 243
Investment securities 3,286 171 2,998 223 2,967 186
Loans1 72,195 6,066 58,485 5,036 47,034 4,067
Stock in FHLB of Indianapolis 746 59 458 35 409 27
Mortgage-backed securities 4,622 304 5,261 311 5,243 353
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Total interest-earning assets 83,630 6,708 72,257 5,839 60,377 4,876
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Interest-bearing liabilities:
Passbook accounts 10,027 283 10,175 313 11,743 376
NOW and money market accounts 14,468 313 13,062 302 12,055 312
Certificates of deposit 40,536 2,401 43,173 2,604 30,644 1,708
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Total deposits 65,031 2,997 66,410 3,219 54,442 2,396
Borrowings 14,372 896 2,503 122 2,154 181
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Total interest-bearing liabilities 79,403 3,893 68,913 3,341 56,596 2,577
Net interest-earning assets $ 4,227 $ 3,344 $ 3,781
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Net interest income $ 2,815 $ 2,498 $ 2,299
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Average interest-earning assets to
average interest-bearing liabilities 105.32% 104.85% 106.68%
(1) Average balances include non-accrual loans.
[PHOTOGRAPH OF SCSB FINANCED PROJECT]
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,
1997 1997 1996 1995
- ------------------------------------------------------------------------------------------------
Weighted average interest rate earned on:
Interest-earning deposits 5.39 3.88 4.63 5.14
Investment securities 7.00 5.20 7.44 6.27
Loans 8.51 8.40 8.61 8.65
Stock in FHLB of Indianapolis 8.25 7.91 7.64 6.60
Mortgage-backed securities 6.60 6.58 5.91 6.73
Total interest-earning assets 8.30 8.02 8.08 8.08
Weighted average interest rate cost of:
Passbook accounts 2.81 2.82 3.08 3.20
NOW and money market accounts 2.74 2.16 2.31 2.59
Certificates of deposit 6.07 5.92 6.03 5.57
Borrowings 6.88 6.23 4.87 8.40
Total interest-bearing liabilities 5.24 4.90 4.58 4.55
Interest rate spread1 3.06 3.12 3.23 3.53
Net yield on weighted average
interest-earning assets2 3.38 3.46 3.81
(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,
1997, because the com putation of net yield is applicable only over a
period rather than at a specific date.
[PHOTOGRAPH OF SCENIC INDIANA]
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
- ---------------------------------------------------------------------------------------
Year ended September 30, 1997 compared
to year ended September 30, 1996
Interest-earning assets:
Interest-earning deposits $ (126) $ (33) $ (93)
Investment securities (52) (72) 20
Loans 1,030 (125) 1,155
Stock in FHLB of Indianapolis 24 2 22
Mortgage-backed securities (7) 33 (40)
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Total $ 869 $ (195) $ 1,064
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Interest-bearing liabilities:
Passbook accounts $ (30) $ (26) $ (4)
NOW and money market accounts 11 (20) 31
Certificates of deposit (203) (46) (157)
Borrowings 774 43 731
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Total $ 552 $ (49) $ 601
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Net change in net interest income $ 317 $ (146) $ 463
- ---------------------------------------------------------------------------------------
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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GENERAL
Net earnings for the year ended September 30, 1997 were $513,000, compared
to $236,000 for the year ended September 30, 1996, an increase of $277,000 or
117.4%. Net interest income after provision for loan losses increased by
$314,000.
Total assets increased during the year ended September 30, 1997. Total
assets at September 30, 1997 were $90,609,000 compared to $82,676,000 at
September 30, 1996, an increase of $7,933,000, or 9.6%. This increase was
primarily due to an increase in loans receivable of $9,940,000 or 15.0%, from
$66,098,000 in 1996 to $76,038,000 in 1997. This growth in loans is a result of
continued economic expansion in SCSB's primary market area.
INTEREST INCOME
Total interest income for the year ended September 30, 1997 was $6,708,000
compared to $5,839,000 for the year ended September 30, 1996, an increase of
$869,000 or 14.9%. This increase resulted primarily from an increase of
$1,030,000 or 20.5%, in interest earned on loans receivable. Although the
weighted average interest rate earned on loans in 1997 dropped slightly from
8.61% to 8.40%, 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.
[PHOTOGRAPH OF CUSTOMER AND SCSB REPRESENTATIVE]
INTEREST EXPENSE
Total interest expense for the period ended September 30, 1997, totaled
$3,892,000, an increase of $551,000, or 16.5%, compared with $3,341,000 for the
year ended September 30, 1996. This increase was primarily a result of the
payment of $869,000 in interest on advances from the Federal Home Loan Bank of
Indianapolis. The weighted average interest rate cost for all deposits and
borrowings in 1997 was 4.90% compared to 4.58% in 1996.
PROVISION FOR LOAN LOSSES
SCSB's provision for loan losses was $104,000 for the year ended September
30, 1997, compared to $100,000 for the year ended September 30, 1996. The 1997
provision exceeded net charge-offs of $38,000 during the year ended September
30, 1997. 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 losses of $392,000 (.5% of total loans) at September 30, 1997, an
amount management believes adequate to absorb anticipated future loan losses.
The allowance as a percentage of non-performing loans was 94% at September 30,
1997, compared to 132% at September 30, 1996. At September 30, 1997,
non-performing loans as a percent of total loans were .55%. This compares
favorably to industry averages and the 1996 percentage of .37%.
NON-INTEREST INCOME
Total non-interest income for the year ended September 30, 1997, totaled
$349,000 compared to $518,000 for the year ended September 30, 1997. The 1997
totals are generally consistent with prior year's earnings.
NON-INTEREST EXPENSE
Non-interest expense decreased $293,000, or 11.5%, from $2,546,000 for the
year ended September 30, 1996, to $2,253,000 for the year ended September 30,
1997. The decrease was primarily attributed to a reduction in the Federal
Deposit Insurance Fund expense due to the one-time special assessment in 1996.
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 affected 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 loans 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
$5,840,000 compared to $4,876,000 for the year ended September 30, 1995, an
increase of $964,000 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 on total interest earning assets 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
Total 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 deposit 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 132% 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.
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 $2,546,000 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.
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, 1997, SCSB's regulatory liquidity ratio was 8.3%, of which 100% were
short-term investments. This was an increase of .8% from its liquidity ratio at
September 30, 1996. 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, 1997, there was a net decrease of
$2,487,000 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, 1997, were $17,746,000, and under OTS
regulations, SCSB could have borrowed up to an additional $10.2 million from the
FHLB of Indianapolis as of that date. As of that date, SCSB had commitments to
fund loan originations of approximately $2.5 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 OTS. 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 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 of at least five percent. At September 30, 1997, 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.
GAAP Tangible Core Risk-based
capital capital capital capital
- -------------------------------------------------------------------------------------------
Corporation GAAP Capital $ 7,171
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SCSB GAAP Capital $ 6,219
- -------------------------------------------------------------------------------------------
Regulatory Capital $5,593,000 $ 5,593,000 $ 5,985,000
Minimum capital requirement 1,327,000 2,653,000 5,048,000
Excess capital $4,266,000 $ 2,940,000 $ 937,000
- -------------------------------------------------------------------------------------------
Regulatory capital ratio 6.3% 6.3% 9.5%
- -------------------------------------------------------------------------------------------
Current requirement 1.5% 3.0% 8.0%
- -------------------------------------------------------------------------------------------
Fully phased-in requirement 3.0% 3.0% 8.0%
- -------------------------------------------------------------------------------------------
LIQUIDITY AND
CAPITAL RESCOURCES
continued
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.
[PHOTOGRAPH OF WOMEN HOLDING CHILD WHILE WORKING ON HOME PC]
YEAR 2000 COMPLIANCE
Because computer memory was so expensive on early mainframes, some computer
programs used only the final two digits for the year in the date field while
maintaining the first two digits
of each year constant. As a result, some computer applications may be unable to
interpret the change from the year 1999 to the year 2000. The Corporation is
actively monitoring its year 2000 computer compliance issues. The bulk of the
Corporation's computer processing is contracted with Intrieve Incorporated of
Cincinnati, Ohio ("Intrieve"). Intrieve's schedule for compliance with year 2000
is for all data processing to be in compliance by May, 1998. Intrieve will
assist the Corporation with other phases of year 2000 compliance through 1998
and 1999. The Corporation has also appointed a year 2000 team to address all
aspects of the year 2000 compliance.
[PHOTOGRAPH OF MAN TALKING ON TELEPHONE]
INDEPENDENT
AUDITORS REPORT
We have audited the accompanying consolidated statements of financial condition
of Shelby County Bancorp and subsidiary as of September 30, 1997 and 1996, 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, 1997.
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, 1997 and 1996, and the results of
their operations and their cash flows for each of the years in the three-year
period ended September 30, 1997, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
Indianapolis, Indiana
November 21, 1997
CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION
SEPTEMBER 30, 1997 AND 1996
OF SHELBY COUNTY BANCORP & SUBSIDIARY
September 30,
Assets 1997 1996
- --------------------------------------------------------------------------------------------
Cash and cash equivalents:
Cash $ 663,335 1,043,977
Interest-bearing deposits 1,772,848 3,879,299
----------- ---------
2,436,183 4,923,276
Investment securities available for sale (note 2) 7,886,663 7,243,756
Investment securities held to maturity (market value:
$806,995 and $1,275,717) (note 3) 808,817 1,267,448
Loans receivable, net (note 4) 76,037,920 66,098,422
Accrued interest receivable on investment securities 133,053
104,504
Accrued interest receivable on loans 486,247 424,054
Stock in FHLB of Indianapolis, at cost 920,200 620,100
Premises and equipment (note 5) 1,774,961 1,874,702
Real estate owned 36,727 --
Prepaid expenses and other assets 88,607 119,353
----------- ---------
$90,609,378 82,675,615
=========== ==========
Liabilities and Shareholders' Equity
- --------------------------------------------------------------------------------------------
Liabilities:
Deposits (note 6) 64,633,384 65,286,137
Advances from FHLB and other borrowings (note 7) 18,057,629 10,071,360
Accrued interest on deposits and FHLB advances 126,484 133,492
Income taxes payable 70,789 225,237
Deferred income taxes (note 8) 333,912 4,954
Accrued expenses and other liabilities (note 6) 215,858 521,557
----------- ---------
83,438,056 76,242,737
Shareholders' equity (note 10):
Common stock no par value; shares authorized
of 5,000,000, shares issued and outstanding of
175,950 1,358,123 1,358,123
Retained earnings - substantially restricted 5,187,531 4,744,525
Net unrealized appreciation on investment securities
available for sale (notes 2 and 8) 625,668 330,230
----------- ---------
7,171,322 6,432,878
----------- ---------
Commitments and contingencies (notes 4 and 7)
$90,609,378 82,675,615
=========== ==========
See accompanying notes to consolidated financial statements.
CONSOLIDATED
STATEMENTS
OF EARNINGS
For the years ended September 30,
1997 1996 1995
- ---------------------------------------------------------------------------------------
Interest income:
Loans receivable $6,065,982 5,036,470 4,067,465
Mortgage-backed securities 303,587 311,135 353,161
Interest-bearing deposits 108,161 234,009 243,140
Investment securities 171,230 222,910 185,720
Dividends from FHLB 59,049 35,008 26,560
---------- --------- ---------
Total interest income 6,708,009 5,839,532 4,876,046
---------- --------- ---------
Interest expense on deposits (note 6) 2,996,545 3,219,473 2,396,189
Interest expense on FHLB advances
and other borrowings (note 7) 895,844 122,018 180,898
---------- --------- ---------
Total interest expense 3,892,389 3,341,491 2,577,087
---------- --------- ---------
Net interest income 2,815,620 2,498,041 2,298,959
Provision for loan losses (note 4) 104,000 100,000 55,000
---------- --------- ---------
Net interest income after
provision for loan losses 2,711,620 2,398,041 2,243,959
---------- --------- ---------
Non-interest income:
Service charges and fees 249,383 235,991 196,553
Annuity commissions 268 41,304 96,411
Other (note 2) 99,683 240,478 74,993
---------- --------- ---------
Total non-interest income 349,334 517,773 367,957
---------- --------- ---------
Non-interest expense:
Salaries and employee benefits 960,375 939,740 939,081
Premises and equipment 268,952 271,121 169,464
Federal deposit insurance (note 6) 74,721 484,823 138,101
Data processing 255,402 236,452 207,849
Advertising 161,625 140,476 173,932
Bank fees and charges 84,296 72,403 64,464
Other 447,483 400,518 385,177
---------- --------- ---------
Total non-interest expense 2,252,854 2,545,533 2,078,068
---------- --------- ---------
Earnings before income taxes 808,100 370,281 533,848
Income taxes (note 8) 294,720 134,100 196,200
---------- --------- ---------
Net earnings $ 513,380 236,181 337,648
========== ======= =======
Earnings per share (note 1) $ 2.83 1.32 1.94
========== ======= =======
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS
OF SHAREHOLDERS' EQUITY
OF SHELBY COUNTY BANCORP & SUBSIDIARY
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
Unrealized
appreciation on
investment Total
Common Retained securities shareholders'
stock earnings available for sale equity
- ------------------------------------------------------------------------------------------------------------------------------------
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
Net change in unrealized appreciation
on investment securities available for
sale (note 2) -- -- 295,438 295,438
Dividends ($.40 per share) -- (70,374) -- (70,374)
Net earnings for 1997 -- 513,380 -- 513,380
---------- --------- ------- ---------
Balance at September 30, 1997 $1,358,123 5,187,531 625,668 7,171,322
========== ========= ======= =========
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the years ended September 30,
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 513,380 236,181 337,648
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 157,211 110,761 79,300
Net deferred loan origination fees (9,979) (8,117) (15,808)
Deferred income taxes 132,000 (155,846) 14,000
Provision for loan losses 104,000 100,000 55,000
Loss on disposal of premises and equipment -- -- 24,999
(Increase) decrease in accrued interest receivable on
investment securities (28,549) (36,223) 13,770
(Increase) decrease in other assets 30,746 26,733 (96,356)
Increase (decrease) in other liabilities (467,155) 540,661 64,788
Gain on sale of securities available for sale (5,807) (28,445) (4,947)
------------ ---------- ----------
Net cash provided by operating activities 425,847 785,705 472,394
------------ ---------- ----------
Cash flows from investing activities:
Loans funded net of collections (10,132,439) (15,838,914) (7,494,460)
Purchase of securities available for sale (5,201,233) (7,916,623) (3,047,998)
Purchase of securities held to maturity -- (116,446) (453,971)
Proceeds from sales of securities available for sale 4,533,477 3,575,098 4,435,762
Maturities of securities available for sale 488,863 3,190,824 418,663
Maturities of securities held to maturity 448,255 148,102 128,209
Purchase of FHLB stock (300,100) (210,800) --
Purchase of premises and equipment (47,758) (37,645) (845,876)
Disposals of premises and equipment 34,853 -- 1
------------ ---------- ----------
Net cash used in investing activities (10,176,082) (17,206,404) (6,859,670)
------------ ---------- ----------
Cash flows from financing activities:
Dividends paid on common stock (70,374) (70,380) (60,980)
Net increase (decrease) in deposits (652,753) 4,084,063 10,134,020
Proceeds from FHLB advances and other borrowings 8,000,000 10,081,000 --
Repayments of FHLB advances and other borrowings (13,731) (9,640) --
Proceeds from issuance of common stock through stock
option plan -- 17,250 --
------------ ---------- ----------
Net cash provided by financing activities 7,263,142 14,102,293 10,073,040
------------ ---------- ----------
Net increase (decrease) in cash and cash equivalents (2,487,093) (2,318,406) 3,685,764
Cash and cash equivalents at beginning of year 4,923,276 7,241,682 3,555,918
------------ ---------- ----------
Cash and cash equivalents at end of year $ 2,436,183 4,923,276 7,241,682
============ ========= =========
Supplemental cash flow information:
Interest paid $ 3,899,397 3,320,806 2,282,351
============ ========= =========
Income taxes paid $ 312,000 80,000 345,900
============ ========= =========
Loans transferred to real estate owned $ 36,727 -- --
============ ========= =========
See accompanying notes to consolidated financial statements.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
OF SHELBY COUNTY BANCORP & SUBSIDIARY
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(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. 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. 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.
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.
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 181,282 for 1997,
179,605 for 1996 and 174,225 for 1995. The effects of outstanding stock options
on fully diluted earnings per share were dilutive by less than three percent for
1997, 1996 and 1995.
Reclassifications
Certain amounts in the 1996 and 1995 consolidated financial statements have
been reclassified to conform with the 1997 presentation.
[PHOTOGRAPH OF CUSTOMER WITH SCSB REPRESENTATIVE WITH SAFTEY DEPOSIT BOX]
NOTES
CONTINUED
(2) INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities available for sale at September 30, consist of the
following
September 30, 1997
Amortized Unrealized Unrealized Market
cost gains losses value
- ----------------------------------------------------------------------------------------------------
Treasury notes:
Due after one year through
five years $ 223,917 1,434 -- 225,351
---------- --------- ------- ---------
Mortgage-backed securities:
FNMA 1,083,541 -- (9,125) 1,074,416
FHLMC 1,562,472 -- (14,308) 1,548,164
FHLB 351,213 -- (650) 350,563
---------- --------- ------- ---------
2,997,226 -- (24,083) 2,973,143
---------- --------- ------- ---------
FHLMC preferred stock 30,691 1,078,103 -- 1,108,794
---------- --------- ------- ---------
Corporate bonds:
Due after one year through
five years 617,180 -- (6,369) 610,811
Due after five years through
ten years 1,636,055 -- (20,407) 1,615,648
---------- --------- ------- ---------
2,253,235 -- (26,776) 2,226,459
---------- --------- ------- ---------
Municipal bonds:
Due after five years through
ten years 443,575 241 -- 443,816
Due after ten years 895,239 13,861 -- 909,100
---------- --------- ------- ---------
1,338,814 14,102 -- 1,352,916
---------- --------- ------- ---------
$6,843,883 1,093,639 (50,859) 7,886,663
========== ========= ======= =========
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
========== ======= ======== =========
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
Inplementation 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, 1997, gross realized gains and gross
realized losses on sales of securities available for sale were $8,603 and
$2,796, respectively, and are included in other non-interest income. 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.
(3) INVESTMENT SECURITIES HELD TO MATURITY
Investment securities held to maturity at September 30, consist of:
September 30, 1997
Amortized Unrealized Unrealized Market
cost gains losses value
- ------------------------------------------------------------------------------------------------------
Mortgage-backed securities:
FHLMC $310,135 3,310 (17,543) 295,902
GNMA 26,144 2,607 -- 28,751
-------- ------ ------- -------
336,279 5,917 (17,543) 324,653
-------- ------ ------- -------
Municipal bonds:
Due after five years through ten years 22,525 4,924 (547) 226,902
-------- ------ ------- -------
Corporate bonds:
Due after one year through five years 250,013 5,427 -- 255,440
-------- ------ ------- -------
$808,817 16,268 (18,090) 806,995
======== ====== ======= =======
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
========== ====== ====== =========
(4) Loans Receivable
Loans receivable at September 30, 1997 and 1996, respectively, consist of:
1997 1996
- --------------------------------------------------------------------
Real estate mortgage loans:
One-to-four family $45,137,304 40,679,356
Commercial 11,317,800 9,828,050
Home equity loans 977,216 740,433
Residential construction 1,053,769 1,002,262
Participations purchased:
One-to-four family 3,300 5,430
Commercial 4,485,388 2,770,483
Consumer loans 9,696,072 8,257,929
Commercial loans 3,946,964 3,320,574
---------- -----------
76,617,813 66,622,517
Less:
Deferred loan fees 188,216 198,195
Allowance for loan losses 391,677 325,900
---------- -----------
76,037,920 $66,098,422
========== ===========
Activity in the allowance for loan losses for the years ended September 30,
consist of:
1997 1996 1995
- --------------------------------------------------------------------------
Balance at beginning of year $ 325,900 241,094 188,879
Provision charged to earnings 104,000 100,000 55,000
Charge-offs (39,369) (15,523) (2,785)
Recoveries 1,146 329 --
--------- ------- -------
Balance at end of year $ 391,677 325,900 241,094
========= ======= =======
At September 30, 1997 and 1996, non-accrual loans totaled $416,601 and
$299,649, respectively.
[right column]
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, 1997 follows:
Balance at beginning of year $996,255
New loans 218,822
Repayments (388,035)
--------
Balance at end of year $827,042
========
At September 30, 1997, the Savings Bank and the Corporation had commitments to
originate $1,958,000 of fixed and variable-rate loans. The interest rates on
these loans commitments range from 6.50% to 12.0% The Savings Bank also had
commitments to fund $587,284 of variable-rate home equity loans.
(5) Premises and Equipment
Premises and equipment consist of:
1997 1996
- -----------------------------------------------------------
Land $ 251,766 251,766
Buildings and improvements 1,326,961 1,315,069
Furniture and equipment 972,890 971,877
---------- ---------
2,551,617 2,538,712
Less accumulated depreciation 776,656 664,010
---------- ---------
$1,774,961 1,874,702
========== =========
[PHOTOGRAPH OF FAMILY AT BEACH]
(6) Deposits
Deposits at September 30, consist of:
1997 1996
Amount % Amount %
- ------------------------------------------------------------------------------------------------------
Passbook accounts (2.85% at
Sept. 30, 1997 and 1996) $ 9,206,489 14% $10,027,894 15%
NOW and Super NOW
(2.00% and 2.50% at
Sept. 30, 1997 and 2.00%
at Sept. 30, 1996) 13,062,895 21 13,532,702 21
Money Market (2.85% to
5.60% at Sept. 30, 1997) 2,731,690 4 -- --
----------- --- ---------- ---
25,001,074 39 23,560,596 36
----------- --- ---------- ---
Certificate accounts:
Up to 3% 109,407 -- 58,945 --
3.01%-4% 203,144 -- 431,614 1
4.01%-5% 3,753,973 6 4,884,518 7
5.01%-6% 20,917,804 32 21,169,641 33
6.01%-7% 11,331,750 18 11,936,295 18
7.01%-8% 2,023,232 3 1,951,528 3
8.01%-9% 1,293,000 2 1,293,000 2
----------- --- ---------- ---
39,632,310 61 41,725,541 64
----------- --- ---------- ---
$64,633,384 100% 65,286,137 100%
=========== === ========== ===
Weighted average cost of
all deposits 4.78% 4.75%
==== ====
Included in certificates at September 30, 1997 and 1996 are $7,641,000
and $4,737,000, 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 Fund (SAIF) at September 30, 1997.
The contractual maturities of certificates at September 30, 1997
consist of (in thousands of dollars):
Amount %
- ------------------------------------------------
Under 12 months $19,446,737 49%
12 to 24 months 4,528,213 11
24 to 36 months 11,356,770 29
36 to 48 months 2,709,640 7
48 to 60 months 1,347,170 3
Over 60 months 243,780 1
----------- ---
$39,632,310 100%
=========== ===
Interest expense by type of deposit for the years ended September 30,
consist of:
Account Type 1997 1996 1995
- --------------------------------------------------------------
Passbook $ 283,217 313,341 376,473
NOW and Super NOW 313,997 301,579 311,926
Certificates 2,399,331 2,604,553 1,707,790
---------- --------- ---------
$2,996,545 3,219,473 2,396,189
========== ========= =========
The deposits of the Savings Bank are 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, required 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 in 1996 which was paid in November 1996.
(7) Advances From FHLB and Other Borrowings
Advances from FHLB and other borrowings at September 30, 1997 and 1996 consist
of:
1997 1996
- -----------------------------------------------------------------------
Advances from FHLB with interest
at variable rates (6.85% and 6.48%
at September 30, 1997 and 1996)
collateralized by qualifying
mortgage loans and investments
(as defined)
equal to 160% of FHLB advances $17,746,000 9,746,000
Mortgage borrowing secured by bank
branch with monthly payments of
principal and interest at 8.75%
through October 2010 311,629 325,360
----------- ----------
$18,057,629 10,071,360
=========== ==========
The weighted average interest rate of all borrowings was 6.88% and
6.55% at September 30, 1997 and 1996, respectively.
Advances from FHLB and other borrowings at September 30, 1997 are
scheduled to mature as follows:
FHLB Other
Advances Borrowings Total
- ----------------------------------------------------------
1998 $17,746,00 13,382 17,759,382
1999 -- 14,601 14,601
2000 -- 15,931 15,931
2001 -- 17,382 17,382
2002 -- 18,965 18,965
Thereafter -- 231,368 231,368
----------- ------- ----------
$17,746,000 311,629 18,057,629
=========== ======= ==========
(8) Income Taxes
The composition of income taxes for the years ended September 30,
consist of:
1997 1996 1995
- -----------------------------------------------------------
Current:
Federal $ 86,196 228,946 121,200
State 76,524 61,000 61,000
--------- ------- ---------
162,720 289,946 182,200
Deferred 132,000 (155,846) 14,000
--------- ------- ---------
$ 294,720 134,100 $ 196,200
========= ======= =========
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:
1997 1996
- -------------------------------------------------------------------------
Deferred tax assets:
Deferred loan fees $ 75,300 79,300
Allowance for delinquent interest 1,400 9,800
Allowance for possible loan losses
for financial reporting purposes 133,200 110,800
SAIF special assessment -- 132,800
Allowance for environmental
contingency -- 18,300
--------- ------
209,900 351,000
========= ======
Deferred tax liabilities:
FHLB stock dividend (29,200) (29,200)
Depreciation (43,200) (29,200)
Tax bad debt reserve (35,900) (51,600)
Deductible prepaid expense (18,400) (25,800)
Investment securities available
for sale (417,112) (220,154)
--------- ------
(543,812) (355,954)
--------- ------
Net temporary differences (333,912) (4,954)
Less valuation allowance -- --
--------- ------
Net deferred tax liability $(333,912) (4,954)
========= ======
The effective income tax rate differs from the statutory federal
corporate rate as follows:
1997 1996 1995
- ------------------------------------------------------------------
Statutory tax rate 34.0% 34.0% 34.0%
State income taxes 5.6 5.6 5.6
Tax exempt interest income (.7) (3.5) (3.2)
Other (2.4) .1 .4
---- ---- ----
Effective tax rate 36.5% 36.2% 36.8%
==== ==== ====
Under the Internal Revenue Code, through 1996, the Savings Bank was
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 was computed based on one of two alternative
methods: (1) a percent of taxable income before such deduction or (2) loss
experience method. The Savings Bank generally computed its annual addition to
its tax bad debt reserves using the percentage of taxable income method through
1996.
Under Legislation enacted in 1996, beginning in fiscal 1997, the
Savings Bank is no longer allowed a special bad debt deduction using the
percentage of taxable income method. Beginning in 1997, the Savings Bank is
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, 1997 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
$18,173, $39,521 and $29,423 for the years ended September 30, 1997, 1996 and
1995. 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.
(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, 1997, 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, 1997, 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, 1997 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, 1997, the Savings Bank was classified as
adequately capitalized.
The following is a summary of the Savings Bank's regulatory capital and
capital requirements at September 30, 1997:
Core Tier 1 Total
GAAP Tangible Tangible leverage Risk based Risk-based
(Dollars in Thousands) capital capital equity capital capital capital
- ------------------------------------------------------------------------------------------------------------
Savings Bank GAAP capital as
submitted to OTS $ 6,219
Less: Unrealized appreciation on
certain available for
sale securities 626
$ 5,593 5,593 5,593 5,593 5,593 5,593
- ------------------------------------------------------------------------------------------------------------
Additional capital items:
General valuation
allowance - - - - 392
5,593 5,593 5,593 5,593 5,985
- ------------------------------------------------------------------------------------------------------------
Total assets:
Adjusted total assets 89,478 89,478 89,478 - -
Risk-weighted assets - - - 63,098 63,098
89,478 89,478 89,478 63,098 63,098
- ------------------------------------------------------------------------------------------------------------
Capital ratio 6.3% 6.3% 6.3% 8.9% 9.5%
- ------------------------------------------------------------------------------------------------------------
Regulatory capital category:
OTS minimum requirements 1.5% 3.0% 8.0%
- ------------------------------------------------------------------------------------------------------------
Prompt Corrective Action requirements:
Not critically undercapitalized equal
to or greater than 2.0%
- ------------------------------------------------------------------------------------------------------------
Adequately capitalized equal to
or greater than 4.0% 4.0% 8.0%
Well-capitalized equal to
or greater than 5.0% 6.0% 10.0%
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.
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. Stock options for the purchase of 1,725
shares were granted to a new director in 1995 at $18 per share, the market value
the date the options were granted. The options can be exercised at any time
until expiration in January 2005. Additionally, stock options for the purchase
of 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 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 13,800 unexercised
options at September 30, 1996. No options were exercised in 1997.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"), effective for transactions entered into after
December 15, 1995. This statement defines a fair value method of accounting for
employee stock options and encourages entities to adopt that method of
accounting for its stock compensation plans. SFAS 123 allows an entity to
continue to measure compensation costs for these plans using the intrinsic value
based method of accounting prescribed by the Accounting Principles Board Option
No. 25, Accounting for Stock Issued to Employees ("APB 25"). The Corporation has
elected to continue to account for its employee stock compensation plan as
prescribed under APB 25 and make the pro forma disclosures of net income and
earnings per share required by SFAS 123. As only 1,725 options were issued in
1996 and no stock options were awarded in 1997, the adoption of SFAS 123 had no
impact on the Corporation's financial position or results of operations.
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 1997 1996
- ----------------------------------------------------------------
Cash, including interest-bearing
deposit of $100,000 $ 156,228 378,342
Investment in Savings Bank 6,218,520 5,585,782
Due from Savings Bank for
income taxes and proceeds
from issuance of common stock 8,426 61,300
Premises and equipment, net 817,735 830,859
Loans receivable 350,155 --
---------- ---------
$7,551,064 6,856,283
========== =========
Liabilities
Due to Savings Bank for
compensation expense 44,994 80,448
Long-term debt 311,629 325,360
Other Liabilities 23,119 17,597
---------- ---------
379,742 423,405
---------- ---------
Shareholders' Equity
Common stock 1,358,123 1,358,123
Retained earnings 5,187,531 4,744,525
Unrealized appreciation on
investment securities available
for sale held by Savings Bank 625,668 330,230
---------- ---------
7,171,322 6,432,878
---------- ---------
$7,551,064 6,856,283
========== =========
Condensed Statement of Earnings
1997 1996 1995
- ------------------------------------------------------------------------
Dividend from Savings Bank $ 200,000 -- 750,000
Lease income 42,135 49,500 21,000
Interest income on deposits 11,926 10,646 1,647
Interest income on loans 21,664 -- --
Interest expense on loans (26,457) (26,212) --
Operating expenses (119,631) (108,393) (78,750)
--------- ------- -------
129,637 (74,459) 693,897
Income tax benefit 46,443 25,300 36,000
--------- ------- -------
Income (loss) before
equity in undistributed
earnings of Savings Bank 176,080 (49,159) 729,897
Equity in undistributed
earnings of Savings Bank 337,300 285,340 (392,249)
--------- ------- -------
Net earnings $ 513,380 236,181 337,648
========= ======= =======
Condensed Statement of Cash Flows
1997 1996 1995
Net cash flows from operating activities:
Net earnings $ 513,380 236,181 337,648
Adjustments to reconcile net cash provided
by operating activities:
Equity in undistributed
earnings of Savings Bank (337,300) (285,340) 392,249
Depreciation and amortization 23,697 22,817 3,803
(Increase) decrease in due
from Savings Bank 52,874 73,925 (36,000)
Increase in due to Savings Bank (29,932) -- --
Decrease in other receivables -- 25 --
Increase in other liabilities -- 22,503 36,438
--------- ------- -------
Net cash provided
by operating activities 222,719 70,111 734,138
Cash flows from investing activities:
Loans funded net of collections (350,155) -- --
Purchase of premises and equipment (10,573) -- (685,439)
--------- ------- -------
Net cash used by investing activities (360,728) (685,439)
--------- ------- -------
Cash flows from financing activities:
Proceeds from borrowings -- 335,000 --
Repayment of borrowings (13,731) (9,640) --
Net proceeds from issuance of common stock -- 17,250 --
Dividends paid to shareholders (70,374) (70,380) (60,980)
--------- ------- -------
Net cash provided
(used) by financing
activities (84,105) 272,230 (60,980)
--------- ------- -------
Net increase (decrease) in cash (222,114) 342,341 (12,281)
Cash and cash equivalents at beginning of year 378,342 36,001 48,282
--------- ------- -------
Cash and cash equivalents at end of year $ 156,228 378,342 36,001
========= ======= =======
Supplemental cash flow information - Interest paid $ 26,457 26,212 --
========= ======= =======
[PHOTOGRAPH OF BOAT]
(12) 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, 1997.
Carrying Estimated
(In Thousands) amount fair value
- ----------------------------------------------------------
Assets
Cash and cash equivalents $ 2,436 2,436
Securities including securities
available for sale 8,695 8,694
Loans receivable, net 76,038 76,443
Accrued interest receivable 619 619
Stock in FHLB of Indianapolis 920 920
Liabilities
- ----------------------------------------------------------
Deposits 64,633 65,374
Borrowings:
FHLB advances 17,746 17,746
Long-term borrowing 312 312
Accrued interest payable 126 126
The following valuation methods and assumptions were used by the
Corporation in estimating the fair value of its financial instruments.
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 adj usted for prepayment estimates
consistent with those used by the Office of Thrift Supervision at September 30,
1997.
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.
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 SCSB TELLER]
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
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 Company maintains the Corporation's
shareholder records. To change name, address or ownership of stock, to report
lost certificates, o r to consolidate accounts, contact: Registrar and Transfer
Company 10 Commerce DriveCranford, New Jersey 07016 (800) 456-0596
General Counsel
Barnes & Thornburg
11 South Meridian Street
Indianapolis, Indiana 46204
[PHOTOGRAPH OF SCSB MAIN OFFICE]
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, 1997 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