SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-20908
PREMIER FINANCIAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
KENTUCKY 61-1206757
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 N. HAMILTON STREET
GEORGETOWN, KENTUCKY 40324
(address of principal executive officer) (Zip Code)
Registrant's telephone number (502) 863-7500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
filing requirements for the past 90 days. Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common stock - 4,209,090 shares outstanding at November 13, 1996.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying information has not been audited by independent public
accountants; however, in the opinion of management such information reflects
all adjustments necessary for a fair presentation of the results for the
interim period. All such adjustments are of a normal and recurring nature.
The accompanying financial statements are presented in accordance with
the requirements of Form 10-Q and consequently do not include all of the
disclosures normally required by generally accepted accounting principles or
those normally made in the registrant's annual Form 10-K filing.
Accordingly, the reader of the Form 10-Q may wish to refer to the
registrant's Form 10-K for the year ended December 31, 1995 for further
information in this regard.
Index to consolidated financial statements:
Consolidated Balance Sheets................................... 3
Consolidated Statements of Income............................. 4
Consolidated Statements of Cash Flows......................... 5
Notes to Consolidated Financial Statements.................... 6
Page 2
PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30 December 31
1996 1995
(Unaudited) (*)
ASSETS
Cash and due from banks $ 7,314 $ 6,340
Federal funds sold 7,650 6,340
Investment securities:
Available for sale 23,918 16,039
Held to maturity 21,426 8,890
Loans $215,169 $113,775
Less: Unearned interest (2,095) (711)
Allowance for loan losses (2,593) (1,735)
-------- --------
Net loans $210,481 $111,329
Premises and equipment, net 3,477 2,129
Excess of cost over net assets acquired (net of
accumulated amortization of $103 and $3, respectively) 5,629 248
Other assets 6,800 4,160
-------- --------
TOTAL ASSETS $286,695 $155,475
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 23,327 $ 16,001
Time deposits, $100,000 and over 41,909 20,237
Other interest bearing 168,812 100,009
-------- --------
Total deposits $234,048 $136,247
Agreements to repurchase securities 6,163 747
Federal Home Loan Bank advances 4,611 755
Other liabilities 2,719 1,511
Debt 0 5,000
-------- --------
Total liabilities $247,541 $144,260
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 1,000,000 shares
authorized; none issued or outstanding $ 0 $ 0
Common stock, no par value; 10,000,000 shares
authorized; 4,209,090 shares at September 30, 1996
and 954,545 shares at December 31, 1995, respectively,
issued and outstanding 978 955
Surplus 32,951 5,897
Retained earnings 5,500 4,493
Net unrealized losses on securities available for sale, net (275) (130)
-------- --------
Total stockholders' equity $ 39,154 $ 11,215
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $286,695 $155,475
See accompanying notes to the consolidated financial statements.
*Derived from audited financial statements.
Page 3
PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30 September 30 September 30
1996 1995 1996 1995
INTEREST INCOME:
Loans, including fees $5,292 $2,380 $11,421 $6,708
Investment securities -
Taxable 526 254 1,280 703
Tax-exempt 174 73 341 213
Federal funds sold and other 117 73 297 216
------ ------ ------- ------
Total interest income $6,109 $2,780 $13,339 $7,840
INTEREST EXPENSE:
Deposits $2,574 $1,201 $ 5,656 $3,287
Debt and other borrowings 187 110 354 200
------ ------ ------- ------
Total interest expense $2,761 $1,311 $ 6,010 $3,487
Net interest income $3,348 $1,469 $ 7,329 $4,353
Provision for possible loan losses (159) (20) (347) (48)
------ ------ ------- ------
Net interest income after provision
for possible loan losses $3,189 $1,449 $ 6,982 $4,305
NON-INTEREST INCOME:
Service charges $ 219 $ 160 $ 543 $ 392
Insurance commissions 83 54 216 122
Investment securities gains (losses) 2 2 2 (6)
Other 90 41 285 92
------ ------ ------- ------
$ 394 $ 257 $ 1,046 $ 600
NON-INTEREST EXPENSES:
Salaries and employee benefits $1,093 $ 565 $ 2,585 $1,716
Occupancy and equipment expenses 255 152 539 454
Other expenses 676 308 1,608 1,002
------ ------ ------- ------
$2,024 $1,025 $ 4,732 $3,172
Income before income taxes $1,559 $ 681 $ 3,296 $1,733
Provision for income taxes 506 197 998 326
------ ------ ------- ------
NET INCOME $1,053 $ 484 $ 2,298 $1,407
Primary earnings per share $ 0.25 $ 0.25 $ 0.77 $ 0.74
Fully diluted earnings per share $ 0.25 $ 0.25 $ 0.77 $ 0.74
Weighted average shares outstanding 4,209 1,909 2,974 1,906
See accompanying notes to the consolidated financial statements.
Page 4
PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
September 30 September 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,298 $ 1,407
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 169 155
Provision for loan losses 347 48
Investment securities losses (gains), net (2) 6
Changes in:
Other assets (45) (213)
Other liabilities 862 187
-------- --------
Net cash provided by operating activities $ 3,629 $ 1,590
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale $(22,214) $ (5,937)
Proceeds from sales of securities available for sale 12,593 4,348
Proceeds from maturities of securities available for sale 6,050 0
Purchases of investment securities held to maturity (1,221) (4,434)
Proceeds from maturities of securities held to maturity 2,077 2,995
Net change in deposits at other financial institutions 0 274
Net change in federal funds sold 40 (20)
Net change in loans (17,510) (12,226)
Purchases of bank premises and equipment (577) (1,210)
Proceeds from bank premises and equipment sold 6 0
Cash paid to purchase subsidiary, net of cash received (12,427) 0
-------- --------
Net cash used in investing activities $(33,183) $(16,210)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits $ 11,010 $ 11,941
Net change in agreements to repurchase securities
and federal funds purchased (1,242) 774
Net change in Federal Home Loan Bank advances (26) 0
Proceeds from debt 0 1,600
Repayment of debt (5,000) 0
Net proceeds from issuance of common stock 27,077 0
Dividends paid (1,291) (620)
-------- --------
Net cash provided by financing activities $ 30,528 $ 13,695
Net increase (decrease) in cash and cash equivalents $ 974 $ (925)
Cash and cash equivalents at beginning of period 6,340 5,067
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,314 $ 4,142
See accompanying notes to the consolidated financial statements.
Page 5
PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Premier
Financial Bancorp, Inc. (the Company) and its wholly-owned subsidiaries,
Georgetown Bancorp, Inc., Georgetown, Kentucky, Citizens Deposit Bank &
Trust, Vanceburg, Kentucky, Bank of Germantown, Germantown, Kentucky,
Citizens Bank, Sharpsburg, Kentucky, and Farmers Deposit Bancorp, Eminence,
Kentucky. In addition, the Company has a data processing service subsidiary,
Premier Data Services, Inc., Vanceburg, Kentucky. All material intercompany
transactions and balances have been eliminated.
NOTE 2 - BUSINESS COMBINATION
Effective July 1, 1996, the Company consummated an Agreement and Plan of
Share Exchange with Farmers Deposit Bancorp, Eminence, Kentucky (Eminence), a
one-bank holding company owning all of the shares of Farmers Deposit Bank.
Under the Share Exchange Agreement, the Company acquired all of the
outstanding shares of Eminence for $1,035 cash per share. The total
acquisition cost of $12,577,000 exceeded the fair value of net assets
acquired by $5,400,000. The combination was accounted for as a purchase and
the results of operations of Eminence are included in the consolidated
financial statements from July 1, 1996.
At June 30, 1996, Eminence had consolidated total assets of $107 million
(including net loans of $82 million), consolidated total liabilities of $100
million (including total deposits of $87 million) and consolidated total
shareholders' equity of $7 million. Eminence recorded net interest income of
$3,487,000 and net income of $1,022,000 for the year ended December 31, 1995
and net interest income of $1,728,000 and net income of $138,000 for the six
months ended June 30, 1996.
NOTE 3 - INVESTMENT SECURITIES
Amortized cost and fair value of investment securities, by category, at
September 30, 1996 are summarized as follows:
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
Available for sale:
U. S. Treasury securities $ 4,952 $ 8 $ (14) $ 4,946
U. S. agency securities 14,787 10 (277) 14,520
Obligations of states and
political subdivisions 1,635 33 0 1,668
Preferred stock 2,000 0 0 2,000
Other equity securities 900 0 (116) 784
------- --- ----- -------
Total available for sale $24,274 $51 $(407) $23,918
Page 6
PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3 - INVESTMENT SECURITIES (CONTINUED)
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
Held to maturity:
U. S. Treasury securities $ 2,061 $ 5 $ (18) $ 2,048
U. S. agency securities 6,567 20 (61) 6,526
Obligations of states and
political subdivisions 11,965 157 (89) 12,033
Other securities 833 0 0 833
------- --- ----- -------
Total held to maturity $21,426 $182 $(168) $21,440
Amortized cost and fair value of investment securities, by category, at
December 31, 1995 are summarized as follows:
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
Available for sale:
U. S. Treasury securities $ 2,547 $10 $ (1) $ 2,556
U. S. agency securities 10,747 18 (101) 10,664
Preferred stock 2,000 0 0 2,000
Other equity securities 900 0 (81) 819
------- --- ----- -------
Total available for sale $16,194 $28 $(183) $16,039
Held to maturity:
Obligations of states and
political subdivisions $ 6,348 $86 $ (46) $ 6,388
U. S. agency securities 2,300 0 (41) 2,259
Other securities 242 1 0 243
------- --- ----- -------
Total held to maturity $ 8,890 $87 $ (87) $ 8,890
Page 7
PREMIER FINANCIAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 - LOANS
Major classifications of loans are summarized as follows:
SEPTEMBER 30 DECEMBER 31
1996 1995
(IN THOUSANDS)
Commercial $ 96,660 $ 57,246
Real estate construction 4,936 2,119
Real estate mortgage 61,164 32,678
Agricultural 12,027 5,216
Consumer 40,230 16,087
Other 152 429
-------- --------
$215,169 $113,775
Unearned interest (2,095) (711)
Allowance for loan losses (2,593) (1,735)
-------- --------
$210,481 $111,329
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
Balance, beginning of period $1,871 $905 $1,735 $886
Reserve acquired through purchase
of subsidiary 812 0 812 0
Net charge-offs (249) 5 (301) (4)
Provision for loan losses 159 20 347 48
------ ---- ------ ----
Balance, end of period $2,593 $930 $2,593 $930
NOTE 6 - INITIAL PUBLIC OFFERING
On May 22, 1996, the Company completed its initial public offering by
selling 2,000,000 common shares at an offering price of $13.00 per share and on
June 19, 1996, the Company completed the sale of an additional 300,000 common
shares (which represented the Underwriters' over-allotment option) at a price of
$13.00 per share. Total proceeds to the Company, net of the underwriting
discount and issuance costs, were $27,077,000.
Page 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
A. Financial Condition and Results of Operations
At September 30, 1996, the Company had total assets of $287 million, an
increase of 84.7% from total assets of $155 million at December 31, 1995.
This increase in total assets is primarily attributable to the acquisition of
Farmers Deposit Bancorp, which had total assets of $107 million at July 1,
1996, the effective acquisition date. Financing for this acquisition was
provided from the proceeds of $27.1 million from the public offering of the
Company's common stock in May and June of 1996. Of the total offering
proceeds, $12.5 million was paid to the former shareholders of Farmers
Deposit Bancorp and $6.9 million was used for the repayment of debt including
$1.9 million debt of Farmers Deposit Bancorp. The balance of the stock
offering proceeds of $7.7 million is available for future acquisitions and to
support the internal growth of the subsidiary banks.
Total loans at September 30, 1996 were $213 million, representing an
increase of 89.1% from total loans of $113 million at December 31, 1995. This
increase was due to growth from the acquisition, as well as from each of the
Company's other subsidiary banks' strong loan growth.
Investment securities at September 30, 1996 totaled $45 million and
equaled only 15.7% of total assets, which reflects management's emphasis on
lending as the major component of earnings.
In connection with the acquisition of Farmers Deposit Bancorp, the total
acquisition cost of $12,577,000 exceeded the fair value of net assets
acquired by approximately $5.4 million.
Funding for the growth in total assets has been provided by an increase
in total deposits of $98 million, including $91 million from the Eminence
acquisition, to $234 million at September 30, 1996, an increase of 72.1% over
the $136 million of total deposits at December 31, 1995. Additional funding
during the nine months ended September 30, 1996 has come from increases in
Federal Home Loan Bank advances of $3.9 million and securities sold under
repurchase agreements of $5.4 million.
At September 30, 1996, the Company had no debt outstanding as proceeds
from the public stock offering were used to repay the $5 million in debt
which was outstanding at December 31, 1995.
Net income for the nine months ended September 30, 1996 of $2,298,000 or
$.77 per share was 63.3% higher than the $1,407,000 or $.74 per share
recorded for the same period in 1995. This increase was due largely to the
increase of $2,976,000 in net interest income reflecting the growth in the
average assets of the Company of approximately $75 million to $200 million
compared to $125 million for the same period in 1995. The growth in average
assets was primarily the result of the acquisition of Farmers Deposit Bancorp
of Eminence, Kentucky, effective July 1, 1996, the acquisition of Citizens
Bank of Sharpsburg, Kentucky, in November, 1995, the issuance of 2,300,000
additional common shares near the end of the second quarter of 1996, and the
continued growth of the Company's other banks. For the three months ended
September 30, 1996, net income totaled $1,053,000 compared to $484,000 for
the same period in
Page 9
1995. Net income was $.25 per share for both periods. The earnings per share
amounts reflect the impact of the increase in weighted average number of
shares outstanding from 1,909,000 to 4,209,000 for the three months ended
September 30, 1995 and 1996, respectively, due to the issuance of additional
common shares in the public offering. Net interest margin on a tax-equivalent
basis of 4.93% remained strong in the three months ended September 30, 1996,
although down from the 5.43% recorded for the nine months ended September 30,
1996. The return on average assets remained constant at 1.5% for the three
and nine months ended September 30, 1996. The return on average equity was
12.7% for the nine months ended and 10.8% for the three months ended
September 30, 1996. The decrease in return on average equity for the third
quarter of 1996 is primarily attributable to the substantial increase in
equity from the public offering proceeds received late in the second quarter
of 1996.
Non-interest income increased $446,000 to $1,046,000 for the first nine
months of 1996 compared to $600,000 for the first nine months of 1995.
Non-interest income increased $137,000 to $394,000 for the three months ended
September 30, 1996 compared to $257,000 for the same period in 1995. The
increases are attributed to the growth and expansion of the Company's
business and its customer base, including higher insurance commissions,
income from the sale of loans and an overall increase in service charges. In
addition, a $50,000 fee was received during the first three months of 1996 in
connection with an exchange of an investment in preferred stock. The
acquisitions of the Eminence and Sharpsburg banks contributed $165,000 and
$232,000 to the increase in non-interest income for the three and nine month
periods ended September 30, 1996, respectively.
Non-interest expenses were $4,732,000 or 3.14% of average assets on an
annualized basis during the first nine months of 1996 compared to $3,172,000
or 3.38% of average assets during the same period of 1995. Non-interest
expenses increased $999,000 during the three months ended September 30, 1996
to $2,024,000 compared to $1,025,000 for the three months ended September
30, 1995. Salaries and employee benefits increased from $565,000 and
$1,716,000 for the three and nine months ended September 30, 1995,
respectively, to $1,093,000 and $2,585,000 for the three and nine months
ended September 30, 1996, respectively. Also increasing significantly were
other operating expenses from $308,000 and $1,002,000 for the three and nine
months ended September 30, 1995 to $676,000 and $1,608,000 for the same
periods in 1996. These increases are reflective of the increase in full-time
equivalent employees and the expenses associated with the increase in total
consolidated assets during these periods. The operations of the Eminence and
Sharpsburg banks added $699,000 and $968,000 to total non-interest expenses
for the three and nine months ended September 30, 1996, respectively.
Page 10
The provision for possible loan losses increased from $20,000 to
$159,000 for the three months ended September 30, 1996 compared to 1995 and
from $48,000 to $347,000 for the first nine months of 1996 compared to 1995.
These increases for possible loan losses are in line with the increase in
average loans outstanding from $86,922,000 for the nine months ended
September 30, 1995 to $147,630,000 for the nine months ended September 30,
1996. The allowance for loan losses at September 30, 1996 of $2,593,000
represented 1.22% of total loans outstanding.
Income before income taxes for the nine months ended September 30, 1996
of $3,296,000 was $1,563,000 or 90% above last years $1,733,000. The
provision for income taxes of $998,000 represented an effective tax rate of
30% versus $326,000 or a 19% tax rate in 1995. The lower tax rate in 1995
was largely as a result of the reduction in the valuation allowance for
deferred tax assets at the Georgetown bank.
B. Liquidity
Liquidity for a financial institution can be expressed in terms of
maintaining sufficient cash flows to meet both existing and unplanned
obligations in a cost effective manner. Adequate liquidity allows the
Company to meet the demands of both the borrower and the depositor on a
timely basis, as well as pursuing other business opportunities as they arise.
Thus, liquidity management embodies both an asset and liability aspect. In
order to provide for funds on a current and long-term basis, the Company
primarily relies on the following sources:
1. Core deposits consisting of both consumer and commercial deposits
and certificates of deposit of $100,000 or more.
2. Cash flow generated by repayment of loans and interest.
3. Arrangements with correspondent banks for purchase of unsecured
federal funds.
4. The sale of securities under repurchase agreements and borrowings
from the Federal Home Loan Bank.
5. Maintenance of an adequate available-for-sale security portfolio.
At September 30, 1996, cash, federal funds sold, and securities
available for sale, the primary sources of the Company's liquidity needs,
totaled $38.9 million or 13.6% of total assets. In addition to these liquid
assets, the Company's subsidiary banks maintain individual credit facilities
to provide additional short-term borrowing availability if needed.
Furthermore, certain of the Company's subsidiary banks have borrowing
facilities with the Federal Home Loan Bank which provides matching funding
for residential real estate loans.
The cash flow statements for the periods presented in the financial
statements provide an indication of the Company's sources and uses of cash as
well as an indication of the ability of the Company to maintain an adequate
level of liquidity.
Page 11
C. Capital
On January 19, 1996, the Board of Directors approved a 2-for-1 stock
split payable March 29, 1996 in the form of a share dividend to shareholders
of record on February 22, 1996, thus, all per share information in this
filing has been adjusted for the stock split. Additionally, on March 15,
1996, the shareholders approved an amendment to the Company's articles of
incorporation that increased the number of common shares authorized from
1,800,000 to 10,000,000, eliminated the $1.00 par value per share relating to
common shares and authorized 1,000,000 preferred shares, without par value.
On January 19, 1996, the Board of Directors adopted, and on March 15,
1996 the Company's shareholders approved, the Premier Financial Bancorp, Inc.
1996 Employee Stock Ownership Incentive Plan, whereby certain employees of
the Company are eligible to receive stock options under the Plan. A maximum
of 100,000 shares of the Company's common stock (adjusted for the 2-for-1
stock split payable March 29, 1996) may be issued through exercises of these
stock options. The option price is the fair market value of the Company's
shares at the date of the grant.
On May 22, 1996, the Company issued 2,000,000 additional common shares
in a public offering at $13.00 per share. After underwriting commissions of
$1,820,000 and expenses of $682,000, the Company realized net proceeds of
$23,498,000. On June 19, 1996, the underwriters exercised an overallotment
option and an additional 300,000 were issued with the Company receiving net
proceeds of $3,627,000 after underwriting commissions of $273,000. The total
net proceeds from the issuance of the 2,300,000 common shares were
$27,125,000. Proceeds of $5,000,000 were used to repay existing Company debt,
$12,550,000 was used to acquire Farmers Deposit Bancorp, Eminence, Kentucky,
and an additional $1,850,000 was used to repay Farmers Deposit Bancorp's
existing debt. The remaining proceeds may be used by the Company to provide
additional capital to its existing banks, for possible future acquisitions or
for general corporate purposes.
With the additional capital and strong earnings performance, the
Company's capital totaled $39.2 million at September 30, 1996 and equaled
13.6% of assets. After deducting goodwill of $5.6 million, which was largely
attributable to the Farmers Deposit Bancorp acquisition, tangible equity was
11.9% of assets.
In each of the first three quarters of 1996, the Company has paid a cash
dividend of $.125 per share. Total dividends through September 30, 1996
amounted to $1.3 million, compared to net income for the nine months of $2.3
million.
Page 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a vote of Security
Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Document
----------- -----------------------
27 Financial Data Schedules
(b) Reports on Form 8-K None
Page 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Corporation has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PREMIER FINANCIAL BANCORP, INC.
Date: November 13, 1996 /s/ Marshall T. Reynolds
-----------------------------------
Marshall T. Reynolds
Chairman of the Board
Date: November 13, 1996 /s/ J. Howell Kelly
-----------------------------------
J. Howell Kelly
President & Chief Executive Officer
Page 14