SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 19, 1999
CLASSIC BANCSHARES, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 0-27170 61-1289391
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(State or other jurisdiction (Commission File No.)(IRS Employer Identification
of incorporation) No.)
344 17th Street, Ashland, Kentucky 41101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (606) 325-4789
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events
On January 19, 1999, the Registrant issued the press release attached
hereto as Exhibit 99, which announced the Registrant's execution of a definitive
agreement to acquire Citizens Bank, Grayson, the Registrant's earnings for the
quarter ended December 31, 1998, and the Registrant's declaration of a cash
dividend.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99 Press release dated January 19, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLASSIC BANCSHARES, INC.
Date: January 27, 1999 By: /s/Lisah M. Frazier
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Lisah M. Frazier, Senior Vice
President, Treasurer and Chief
Financial Officer
EXHIBIT 99
FOR IMMEDIATE RELEASE
For Additional Information Contact:
David B. Barbour, President and Chief Executive Officer
Lisah Frazier, Senior Vice President, Treasurer and Chief Financial Officer
(606) 325-4789
Fax (606) 324-1307
CLASSIC BANCSHARES, INC. TO ACQUIRE CITIZENS BANK,
GRAYSON, REPORTS THIRD QUARTER EARNINGS AND
DECLARES A CASH DIVIDEND
Ashland, Kentucky, -- January 19, 1999 -- Classic Bancshares, Inc. (NASDAQ
- - CLAS) announced the execution of a definitive agreement which will result in
the acquisition of Citizens Bank, Grayson by Classic. The transaction is valued
at approximately $4.5 million.
In the transaction Citizens shareholders will receive $75 in cash for each
share of Citizens common stock. The transaction is subject to the approval of
the shareholders of Citizens as well as banking regulators, and the completion
of due diligence to the satisfaction of Classic.
"We are extremely pleased to announce this transaction," noted Charles
Jordan, Jr., President and Chief Executive Officer of Citizens Bank of Grayson.
"We believe the value to be realized in this transaction for our shareholders is
very fair. Our customers will also benefit from the enhanced product and service
offerings to be provided by Classic and will be well served by Classic's
commitment to hometown banking services."
"The addition of Citizens Bank of Grayson will enhance our deposit
gathering capabilities and lending operations in the I-64 and U.S. 23 banking
corridor," noted David B. Barbour, President and Chief Executive Officer of
Classic Bancshares, Inc. He further commented, 'the Grayson area represents a
natural extension of our banking franchise in accordance with our strategic plan
and will provide Grayson area residents with Classic's wide range of banking
products and services through a locally managed office."
Citizens Bank of Grayson operates from a single office located in Grayson,
Kentucky located approximately 25 miles from Classic's headquarters in Ashland,
Kentucky. Citizens Bank had deposits of $12.8 million, loans of $8.7 million and
total assets of $14.8 million as of September 30, 1998.
Classic Bancshares, Inc. also announced that it had net income for the
third quarter ended December 31, 1998 of $233,000 compared to net income in the
same quarter of 1997 of $281,000 and net income of $639,000 for the nine months
ended December 31, 1998 compared to net income of $792,000 for the nine months
ended December 31, 1997. Return on average assets was .7% for the third quarter
ended December 31, 1998 and .6% for the nine months ended December 31, 1998
compared to .8% for the three and nine months ended December 31, 1997. Earnings
per share were $.20 for the three months ended December 31, 1998 and $.55 for
the nine months ended December 31, 1998 compared to $.23 for the three months
ended December 31, 1997 and $.65 for the nine months ended December 31, 1997.
Classic Bancshares' assets increased $10.7 million from $130.9 million at
March 31, 1998 to $141.6 million at December 31, 1998. The increase in assets
was primarily due to an increase in loans of $7.0 million and an increase in
investment and mortgage-backed securities of $5.8 million. Loans increased $7.0
million from $90.1 million at March 31, 1998 to $97.1 million at December 31,
1998. The increase in loans is primarily the result of aggressive origination
efforts and improved loan demand within the Company's market areas. Deposits
increased $10.8 million from $104.6 million at March 31, 1998 to $115.4 million
at December 31, 1998 due to increased marketing efforts and the opening of two
additional banking offices in March and May of 1998. Non-performing assets
increased from .4% of total assets at March 31, 1998 to .8% at December 31,
1998.
Barbour stated that, "The third quarter of 1998 represents the second full
quarter in which our two new banking offices were operational and while we are
not experiencing the same level of earnings in the current period as in prior
periods, earnings on a quarter to quarter basis are experiencing positive
trends. Deposit growth of 10.3% and loan growth of 7.8% was especially
gratifying and a direct result of increased marketing efforts and the opening of
two new banking offices in the first and second calendar quarter of 1998.
Increased operating costs related to our two new banking offices are partially
offset by higher levels of non-interest income from fees and service charges on
deposits and fees earned from the origination of secondary market loans as well
as cost savings generated from the restructuring of employee benefit plans. "
Barbour continued, "the acquisition of Citizens Bank of Grayson will allow
us to extend our banking franchise in an important and growing market area and
is anticipated to be immediately accretive to earnings. The addition of Citizens
further allows the Company to continue the consolidation of corporate functions
related to data processing, internal audit, personnel and technology areas which
should positively impact our cost structure."
"We are pleased to announce that Classic Bancshares' transactional website
at www.bank-anywhere.com will be operational during the first quarter of 1999,
allowing the customers of our subsidiary banks to review account balances and
statement history, transfer funds, pay bills and apply for loans online, as well
as provide shareholders and potential investors with current and relevant
information regarding our Company."
Net interest income was $1.2 million for the third quarter ended December
31, 1998 and $3.6 million for the nine months ended December 31, 1998 compared
to $1.2 million for the third quarter ended December 31, 1997 and $3.5 million
for the nine months ended December 31, 1997. The net interest margin was 3.8%
for the three months and nine months ended December 31, 1998 compared to 3.9%
for the three months and nine months ended December 31, 1997.
Non-interest income was $171,000 for the quarter ended December 31, 1998
and $494,000 for the nine months ended December 31, 1998 compared to $156,000
for the quarter ended December 31, 1997 and $682,000 for the nine months ended
December 31, 1997. Non-interest income increased for the quarter due to an
increase in fees and service charges on deposits and fees earned on the
origination of secondary market loans. The decrease in non-interest income for
the nine month period was primarily the result of a $330,000 gain recorded in
1997 from the settlement of a subsidiary's pension plan offset by an increase in
fees and service charges on deposits for the nine months ended December 31,
1998. The increase in fees and service charges on deposits is the result of new
product offerings, an increased deposit base and aggressive pricing strategies.
Total non-interest expense for the quarter ended December 31, 1998 was $1.1
million and $3.2 million for the nine months ended December 31, 1998 compared to
$911,000 for the quarter ended December 31, 1997 and $3.0 million for the nine
months ended December 31, 1997. Non-interest expenses increased due to increased
costs related to the opening of two new offices in the first and second quarter
of 1998. Non-interest expenses also increased for the quarter due to
non-interest expenses being offset by a gain on the sale of other real estate of
approximately $30,000 during the third quarter in 1997.
Stockholders' equity was $20.9 million at December 31, 1998 compared to
$20.4 million at March 31, 1998.
Classic Bancshares, Inc. also announced that the Company will pay a
quarterly cash dividend of $.08 per share. The dividend will be payable on
February 15, 1999 to shareholders of record on February 1, 1999.
Classic Bancshares, Inc. is headquartered in Ashland, Kentucky and has two
subsidiaries, Classic Bank and First National Bank of Paintsville. Classic Bank
operates at 344 Seventeenth Street, Ashland, Kentucky with two branch offices
located in Boyd and Greenup counties. First National Bank of Paintsville
operates at 240 Main Street, Paintsville, Kentucky with one branch office
located in Johnson County.
When used in this press release, the words or phrases "should result,"
"will likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties, including changes in economic condition in the Company's market
area, changes in policies by regulatory agencies, fluctuations in interest
rates, demand for loans in the Company's market area and competition, that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. The Company wishes to caution readers not to
place undue reliance on such forward-looking statements, which speak only as of
the date made. The Company wishes to advise readers that the factors listed
could affect the Company's financial performance and could cause the Company's
actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
The Company does not undertake-and specifically declines any obligation-to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
SELECTED FINANCIAL DATA
The following table sets forth selected financial data of Classic
Bancshares, Inc. as of December 31, 1998 and March 31, 1998 and for the three
and nine months ended December 31, 1998 and 1997.
Dec. 31 March 31,
1998 1998
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(In Thousands)
Selected Financial Condition Data:
Total Assets $ 141,648 $ 130,933
Cash and other interest bearing deposits
with other financial institutions 2,721 3,625
Loans receivable, net 97,143 90,100
Investment securities:
Available for sale 27,024 18,177
Mortgage-backed securities:
Available for sale 4,761 7,831
Goodwill 2,810 2,903
Deposits 115,433 104,627
Securities sold under agreement to repurchase 2,110 3,522
FHLB advances 897 -
Stockholders' Equity, subject to certain restrictions 20,888 20,407
Three Months Ended Nine Months Ended
December 31, December 31,
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1998 1997 1998 1997
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(In Thousands)
Selected Operations Data:
Total interest income $ 2,484 $ 2,391 $ 7,333 $ 7,145
Total interest expense 1,262 1,216 3,765 3,614
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Net interest income 1,222 1,175 3,568 3,531
Provision for loan losses 25 25 65 127
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Net interest income after provision
for losses on loans 1,197 1,150 3,503 3,404
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Fees and service charges 124 111 337 269
Gain on sale of securities - 10 4 28
Other noninterest income 47 35 153 385
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Total noninterest income 171 156 494 682
Total noninterest expense 1,079 911 3,156 2,974
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Income before income taxes 289 395 841 1,112
Income tax expense (benefit) 56 114 202 320
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Net income $ 233 $ 281 $ 639 $ 792
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At or for the At or for the
Three Months Ended Nine Months Ended
December 31, December 31,
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1998 1997 1998 1997
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Other Data:
Return on average assets (ratio of net
income to total average assets)* .7% .8% .6% .8%
Return on average equity (ratio of net
income to total average assets)* 4.5 5.7 4.2 5.4
Net interest margin** 3.8 3.9 3.8 3.9
Non-performing assets to total assets 0.8 0.4 0.8 0.4
Allowance for loan losses to non-
performing loans 93.2 252.4 93.2 252.4
Equity to total assets at end of period 14.8 15.1 14.8 15.1
Efficiency ratio*** 77.5 68.4 77.7 70.6
Basic earnings per share $0.20 $0.23 $0.55 $0.65
Fully diluted earnings per share $0.19 $0.23 $0.52 $0.65
Book value per share $16.09 $15.38 $16.09 $15.38
Tangible book value per share $13.93 $13.13 $13.93 $13.13
Number of full service offices 5 3 5 3
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* Annualized
** Net interest income annualized divided by average-earning assets.
*** Non-interest expenses divided by the total of net interest income and
non-interest income.