1
UNITED STATES 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 quarter ended March 31, 1997
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 34-0-20494
CARDINAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Kentucky 61-1128205
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
400 East Vine St., Suite 300 Lexington, Kentucky 40507
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (606) 255-8300
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark whether 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 registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the issuer's class of common stock, as of
April 30, 1997: 1,593,757 shares of common stock, no par value.
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CARDINAL BANCSHARES, INC. AND SUBSIDIARIES
INDEX
Page
----
Part I Financial Information
Item 1. Consolidated Balance Sheets 1
Consolidated Statements of Operations 2-3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-14
Part II
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
3
Cardinal Bancshares, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
March 31, December 31,
1997 1996
---- ----
(Unaudited)
Assets
Cash and due from banks $ 20,886 21,407
Interest bearing deposits in banks 1,706 1,400
Federal funds sold 16,015 11,647
Securities available for sale (amortized cost of
$104,988 in 1997 and $111,325 in 1996) 105,218 112,203
Loans 475,176 470,067
Less: Unearned income 2,299 2,851
Allowance for loan losses 6,624 6,374
--------- -------
Net loans 466,253 460,842
Premises and equipment 7,798 8,019
Goodwill and other intangible assets, less accumulated
amortization of $3,422 in 1997 and $3,295 in 1996 5,233 5,360
Accrued interest receivable and other assets 8,240 8,183
--------- -------
Total assets $ 631,349 629,061
========= =======
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 45,690 47,510
Interest bearing 503,087 501,738
--------- -------
Total deposits 548,777 549,248
Securities sold under agreements to repurchase 7,070 4,780
Notes payable 628 1,878
Advances from the Federal Home Loan Bank 17,010 16,776
Accrued interest payable and other liabilities 6,679 6,082
--------- -------
Total liabilities 580,164 578,764
Stockholders' equity:
Common stock, without par value. Authorized
5,000,000 shares; issued and outstanding
1,593,757 voting and 1,998 non-voting shares in 1997 and
1,592,853 voting and 1,958 non-voting shares in 1996 34,778 34,759
Retained earnings 16,883 15,587
Net unrealized gain on securities available for sale,
net of tax 152 579
ESOP and MRP loan obligations (628) (628)
--------- -------
Total stockholders' equity 51,185 50,297
--------- -------
Total liabilities and stockholders' equity $ 631,349 629,061
========= =======
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4
Cardinal Bancshares, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Interest income:
Loans, including fees $ 10,973 11,869
Securities:
Taxable 1,609 2,326
Tax-exempt 51 40
Federal funds sold 255 273
Deposits in banks 18 103
--------- -------
Total interest income 12,906 14,611
Interest expense:
Deposits 5,578 6,381
Notes payable 33 516
Advances from the Federal Home
Loan Bank 292 315
Securities sold under agreements
to repurchase 57 60
--------- -------
Total interest expense 5,960 7,272
--------- -------
Net interest income 6,946 7,339
Provision for loan losses 369 838
--------- -------
Net interest income after
provision for loan losses 6,577 6,501
Noninterest income:
Service charges on deposits 338 310
Insurance commissions 30 179
Car club fees -- 62
Trust income 174 89
Gains on sales of loans 36 89
Securities gains, net 16 49
Loan servicing fees 104 47
Taxable municipal bond securities
litigation settlement 51 --
Other 145 168
--------- -------
Total noninterest income 894 993
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5
Cardinal Bancshares, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Noninterest expense:
Salaries and employee benefits 2,517 3,614
Net occupancy expense 342 506
Furniture and equipment expense 402 686
Professional fees 86 186
Bank shares tax 132 136
FDIC insurance 16 127
Amortization of goodwill and other
intangible assets 127 127
Data processing services 256 396
Operating supplies 116 205
Telephone expense 100 199
Postage and courier expense 151 218
Advertising and business development 232 330
Transportation, meals and lodging 54 139
Other 453 735
--------- -------
Total noninterest expense 4,984 7,604
Income (loss) before income taxes 2,487 (110)
Income taxes expense (benefit) 872 (6)
--------- -------
Net income (loss) $ 1,615 (104)
========= =======
Net income (loss) per share:
Primary $ 0.94 (0.06)
========= =======
Fully diluted $ 0.94 (0.06)
========= =======
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6
Cardinal Bancshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Net income (loss) $ 1,615 (104)
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 369 838
Depreciation, amortization and accretion, net 550 832
Deferred income tax benefit (79) (199)
Net gain on sales of securities and loans (52) (138)
Increase in accrued interest receivable
and other assets 243 198
Increase (decrease) in accrued interest payable
and other liabilities 597 (254)
--------- -------
Net cash provided by operating activities 3,243 1,173
--------- -------
Cash flows from investing activities:
Net increase in interest bearing deposits
in banks (306) (4,634)
Net increase in federal funds sold (4,368) (1,150)
Purchase of securities available for sale (23,026) (15,481)
Proceeds from sales of securities available for sale 12,491 3,601
Proceeds from maturities of securities available for sale 16,908 10,929
Net increase in loans (5,764) (2,573)
Purchases of premises and equipment (202) (1,344)
--------- -------
Net cash used in investing activities (4,267) (10,652)
--------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits (471) 9,166
Net increase (decrease) in securities sold under
agreements to repurchase 2,290 (535)
Net decrease in notes and advances payable (1,016) (448)
Dividends paid (319) (298)
Issuance of common stock 19 190
--------- -------
Net cash provided by financing activities 503 8,075
--------- -------
Net decease in cash and cash equivalents (521) (1,404)
Cash and cash equivalents at beginning of period 21,407 22,172
--------- -------
Cash and cash equivalents at end of period $ 20,886 20,768
========= =======
Supplemental cash flow information:
Cash paid for income taxes -- --
Cash paid for interest 5,963 7,239
========= =======
Noncash financing and investing activities:
Loans transferred to other assets -- 10
========= =======
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Cardinal Bancshares, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accounting and reporting policies of Cardinal Bancshares, Inc.
("Cardinal") and its wholly-owned subsidiaries, The Vine Street Trust Company,
HNB Bank, NA, First & Peoples Bank, Alliance Bank, and Jefferson Banking
Company, conform to generally accepted accounting principles and, in
management's view, general practices within the banking industry.
The consolidated financial statements include the accounts of Cardinal
and its subsidiaries. Significant intercompany accounts and transactions have
been eliminated in consolidation. The consolidated financial statements for the
three months ended March 31, 1997 and 1996 are unaudited and do not include
information or footnotes necessary for a complete presentation of financial
condition, results of operations and cash flows. The interim financial
statements include all adjustments, consisting only of normal recurring
accruals, which in the opinion of management are necessary in order to make the
financial statements not misleading. The consolidated financial statements
should be read in conjunction with the Summary of Significant Accounting
Policies footnote which appears in Cardinal's 1996 Annual Report and Form 10-K
filed with the Securities and Exchange Commission. The results of operations for
the three months ended March 31, 1997 are not necessarily indicative of the
results to be expected for the entire year ending December 31, 1997.
2. Security First Network Bank Spin-Off
On May 23, 1996 Cardinal effected the spin-off of its wholly-owned
subsidiary, Security First Network Bank ("SFNB"). Cardinal stockholders received
on a pro rata basis the distribution of 2,398,908 shares of SFNB common stock.
The terms and conditions of the spin-off are set forth in the First Amended and
Restated Plan of Distribution adopted by the Board of Directors of Cardinal on
October 5, 1995. Cardinal no longer has any ownership interest in SFNB. SFNB's
Common Stock is traded on NASDAQ's National Market System under the trading
symbol "SFNB."
3. Cardinal Credit Corporation Sale of Assets
On May 14, 1996 Cardinal completed the sale of substantially all of the
assets of its subsidiary, Cardinal Credit Corporation, to Norwest Financial
Kentucky, Inc. Cardinal recorded an after-tax gain of approximately $4.6 million
in connection with such sale and the related termination of Cardinal Credit
Corporation's business. As part of the agreement with Norwest, Cardinal agreed
that for three years it would not engage in the consumer finance business in the
same or substantially similar manner in which Cardinal Credit Corporation
engaged in that business. Such agreement does not, however, preclude any
Cardinal subsidiary from engaging in its banking business, including the
origination of consumer loans, as currently conducted. The net cash proceeds of
the sale were invested in short-term securities.
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4. The amortized cost and market value of securities available for sale
are summarized as follows:
March 31, 1997 December 31, 1996
-------------- -----------------
Amortized Market Amortized Market
(In thousands) Cost Value Cost Value
-------------- ---- ----- ---- -----
U. S. Treasury $ 19,701 20,009 23,721 24,174
Federal Agencies 25,510 25,453 38,155 38,214
Mortgage backed securities 47,155 47,192 41,021 41,341
States and political subdivision 8,018 7,960 3,898 3,944
Equity and other securities 4,604 4,604 4,530 4,530
----- ----- ----- -----
$104,988 105,218 111,325 112,203
======== ======= ======= =======
5. Allowance for Loan Losses
Changes in the allowance for loan losses are as follows:
March 31, December 31,
(In thousands) 1997 1996
-------------- ---- ----
Balance, January 1 $6,374 5,789
Provision for Loan Losses 369 3,480
Recoveries 92 474
Loans charged off 211 2,035
Changes incident to spin-off
and sale of loans (1,334)
------ ------
Balance, end of period $6,624 6,374
====== =====
6. Adoption of New Accounting Principles
On January 1, 1997 Cardinal implemented Statement of Financial
Accounting Standard ("SFAS") No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." Under this standard,
accounting for transfers and servicing of financial assets and extinguishments
of liabilities is based on control. After a transfer of financial assets, an
entity recognizes the financial and servicing assets it controls and the
liabilities it has incurred, derecognizes financial assets when control has been
surrendered and derecognizes liabilities when extinguished.
The implementation of SFAS No. 125 did not have a material effect on
Cardinal's consolidated financial statements.
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7. Subsequent Event
On May 1, 1997 Cardinal announced that it had signed a definitive
agreement to merge with Area Bancshares Corporation, ("Area") (Nasdaq - NMS:
AREA). Under terms of the agreement, Area will exchange 2.7391 shares of its
common stock for each share of Cardinal common stock outstanding. Based on
Area's closing price of $22.00 on April 30, 1997 and Cardinal's total
outstanding shares and options, the transaction would be valued at approximately
$109 million and represent an exchange value of $60.26 for each share of
Cardinal common stock. The purchase price would be 1.88 times Cardinal's March
31, 1997 book value. The combination, which will be accounted for as a pooling
of interests, is expected to be consummated during the fourth quarter of 1997,
pending Area and Cardinal shareholder approval, regulatory approval, and other
customary conditions of closing. The exchange of Area stock for Cardinal stock
is expected to be a tax-free exchange for federal income tax purposes.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CARDINAL
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996.
RESULTS OF OPERATIONS
Net income for the three months ended March 31, 1997 was $1.615 million
or $0.94 primary earnings per share as compared to a net loss of $104,000 and
($0.06) primary earnings per share for the same period in 1996. Annualized
return on average stockholders' equity and average assets for the first three
months of 1997 and 1996 were 12.65%, 1.03%, (1.02%) and (0.06%), respectively.
Net interest income is the difference between interest earned and
interest expensed plus any loan fees earned. Net interest margin is net interest
income divided by average earning assets. The following table summarizes the
above for the three months ended March 31, 1997 and 1996:
(Dollars in thousands)
Three months ended March 31
1997 1996
-------- --------
Interest income, including loan fees $ 12,906 14,611
Interest expense 5,960 7,272
-------- --------
Net interest income $ 6,946 7,339
======== ========
Average earning assets $594,232 $632,048
Net interest margin (annualized) 4.68% 4.64%
Net interest income was relatively flat from 1996 to 1997 with the
increase in the net interest margin offsetting the decline in average earning
assets. The comparison of net interest income between reporting periods is and
will continue to be effected by the sale of Cardinal Credit Corporation and the
spin-off of SFNB. Below is the same table as above, but eliminating the interest
income, interest expense and average assets of Cardinal Credit Corporation and
SFNB (see Notes 2 and 3 to the Consolidated Financial Statements).
(Dollars in thousands)
Three months ended March 31,
1997 1996
-------- --------
Interest income, including loan fees $ 12,906 12,371
Interest expense 5,960 6,501
-------- --------
Net interest income $ 6,946 5,870
======== ========
Average earning assets $594,232 $568,426
Net interest margin (annualized) 4.68% 4.13%
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Management provided $369,000 in provision for loan losses for the first
three months of 1997 compared to $838,000 for the same period in 1996.
Management provides a level of reserves based upon an evaluation of the loan
portfolio's quality, growth, mix and prior loan loss experience. The decrease in
the level of provision for loan losses between reporting periods is primarily
the result of decreases in the level of net charge-offs. Net charge-offs for the
three months ended March 31, 1997 were $119,000 compared to $441,000 for the
same period in 1996. Net charge-offs in 1996 primarily resulted from losses in
the consumer finance portfolio, principally of Cardinal Credit Corporation,
which totaled $344,000 for the first three months in 1996. In addition, net
charge-offs in the indirect automobile loan portfolio decreased from $137,000
for the three months in 1996 to $96,000 for the same period in 1997. As
discussed above at Note 3 to the Consolidated Financial Statements, on May 14,
1996 Cardinal sold substantially all of the assets of Cardinal Credit
Corporation, including all of its $26 million of consumer finance loans. See
"Notes to Consolidated Financial Statements." See "Risk Elements in Loan
Portfolio."
Noninterest income decreased $99,000 for the first three months of 1997
as compared to the same period in 1996. Below is a table that eliminates the
noninterest income of Cardinal Credit Corporation and SFNB from the amounts
reported in the first three months of 1996.
Three months ended March 31
-------------------------------------------------------------------
1997 1996 Cardinal 1996
(Dollars in thousands) as reported as reported Credit SFNB adjusted
----------- ----------- -------- ---- --------
Noninterest income:
Service charges on deposits $338 310 27 283
Insurance commissions 30 179 133 19 27
Car club fees - 62 62 - -
Trust income 174 89 - - 89
Gains on sale of loans 36 89 - - 89
Security gains, net 16 49 - - 49
Loan servicing fees 104 47 - - 47
Taxable municipal bond
securities litigation
settlement 51 - - - -
Other 145 168 32 5 131
---- --- --- - ---
Total noninterest income $894 993 227 51 715
==== === === == ===
The increase in trust income results primarily from an increase in
average assets under management. The decrease in gains on sales of loans results
from a decline in mortgage loans sold in the secondary market. The $51,000
taxable municipal bond securities litigation settlement represented monies
received as a result of losses incurred in 1992 from the sale of certain taxable
municipal bonds.
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Noninterest expenses decreased $2.6 million between reporting periods
of 1997 and 1996, substantially all of which can be attributed to the
termination of business of Cardinal Credit Corporation and the spin-off of SFNB.
Cardinal's noninterest expenses were not impacted by Cardinal Credit Corporation
and SFNB for the first quarter of 1997 since Cardinal Credit Corporation
terminated business on May 14, 1996 and SFNB was spun-off effective May 23,
1996. Below is a table that eliminates the effect of Cardinal Credit Corporation
and SFNB from noninterest expenses for the first quarter of 1996.
Three months ended March 31
-------------------------------------------------------------------
1997 1996 Cardinal 1996
(Dollars in thousands) as reported as reported Credit SFNB as adjusted
----------- ----------- -------- ---- -----------
Noninterest expense:
Salary and employee benefits $2,517 3,614 800 459 2,355
Net occupancy expense 342 506 139 31 336
Furniture & equipment
expense 402 686 60 253 373
Professional fees 86 186 5 67 114
Bank share taxes 132 136 - 6 130
FDIC insurance 16 127 - 19 108
Amortization of goodwill
and other intangibles 127 127 - - 127
Data processing services 256 396 7 96 293
Operating supplies 116 205 39 28 138
Telephone 100 199 46 35 118
Postage and courier 151 218 34 14 170
Advertising and business
development 232 330 25 90 215
Transportation, meals
and lodging 54 139 8 79 52
Other 453 735 80 115 540
------ ----- ----- ----- -----
Total noninterest expense $4,984 7,604 1,243 1,292 5,069
====== ===== ===== ===== =====
FDIC insurance substantially declined as a result of passage of the
Deposit Insurance Funds Act of 1996, which decreased the insurance assessments
for banks and thrifts. Deposit accounts at Cardinal's subsidiary banks are
insured to applicable limits by the Bank Insurance Fund ("BIF") of the FDIC and
deposit amounts at Cardinal's subsidiary thrift are insured to the applicable
limits by the Savings Association Insurance Fund ("SAIF").
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Beginning January 1, 1997, BIF institutions are required to pay a
portion of the $780 million in annual FICO interest payments. For the first
three years, the BIF assessment rates for the FICO payments must be one-fifth of
that for SAIF institutions. It is currently estimated that this will equal an
amount of 1.29 cents per $100 in deposits on BIF-insured deposits and 6.44 cents
for SAIF deposits. After January 1, 2000, the FICO assessment will be spread
evenly among all BIF and SAIF deposits which is estimated to be at the rate of
2.43 cents per $100 in deposits.
CONSOLIDATED BALANCE SHEET
Total assets increased $2.3 million from December 31,1996 to March 31,
1997. Loans, net of unearned income, increased $5.7 million between December 31,
1996 and March 31, 1997 funded primarily by liquidation of securities available
for sale. Deposits declined slightly from $549.2 million at December 31, 1996 to
$548.8 million at March 31, 1997.
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RISK ELEMENTS IN LOAN PORTFOLIO
A summary of nonperforming loans and assets follows:
(Dollars in thousands)
March 31, December 31,
1997 1996
---- ----
Nonaccrual loans $1,015 607
90 days or more past due and
still accruing 995 373
------ ---
Total nonperforming loans 2,010 980
Other real estate owned 18 18
------ ---
Total nonperforming assets $2,028 998
====== ===
Total nonperforming loans as a
percentage of period-end net loans 0.43% 0.21%
Total nonperforming assets as a per-
centage of period-end net loans
and OREO 0.43% 0.21%
Allowance for loan losses to
period end net loans 1.40% 1.36%
Allowance for loan losses to
nonperforming loans 329.6% 650.4%
At March 31, 1997, total impaired loans as recognized under SFAS
No. 114 were $763,000 as compared to $509,000 at December 31, 1996.
At March 31, 1997, nonperforming loans totaled $2.010 million, an
increase of $1.030 million over December 31, 1996. The primary reasons for the
increase in nonperforming loans were the failure to renew three loans in a
timely manner and an increase in nonaccrual loans related to the indirect
automobile portfolio. At March 31, 1997 there were three loans totaling $501,000
that had matured and were not renewed before they became 90 days past due.
During the month of April, these three loans were renewed and returned to
performing status.
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At March 31, 1997, Cardinal's loan portfolio was comprised of the
following:
(Dollars in thousands) Percent
---------------------- -------
Commercial $ 53,411 11.3%
SBA 72,018 15.2%
Commercial Real Estate 100,208 21.2%
Residential Real Estate 167,851 35.5%
Consumer 79,389 16.8%
-------- -----
Total $472,877 100.0%
======== =====
The commercial loans are primarily locally generated and represent
lower middle market business loans. The commercial real estate loans are
primarily owner-occupied facilities. The SBA portfolio is largely real estate
related. Approximately 72% of the SBA portfolio is related to the hospitality
industry. These loans are typically to owner operators of franchised middle or
economy class hotels. The hospitality portfolio has been generated utilizing
various SBA programs which significantly limit Cardinal's risk related to this
industry. Approximately 51% of the SBA loan portfolio is guaranteed by the SBA.
The consumer loan portfolio is comprised of direct installment loans
and indirect automobile loans which are generated and serviced in the local
markets served by Cardinal subsidiaries. The indirect loan portfolio at March
31, 1997 totaled approximately $40 million and consisted mainly of used car
paper generated in south central and eastern Kentucky. Of the $119,000 in net
charge-offs for the three months ended March 31, 1997, $96,000 was attributable
to the indirect automobile portfolio or 1.0% of the indirect automobile
portfolio (annualized).
CAPITAL ADEQUACY
As of March 31, 1997 stockholders' equity totaled $51.2 million, an
increase of $888,000 since December 31, 1996. Below is a summary of the changes
in stockholders' equity between December 31, 1996 and March 31, 1997.
(Dollars in thousands)
Balance, December 31, 1996 $ 50,297
Issuance of common stock 19
Net income 1,615
Dividends paid (319)
Decrease in net unrealized gain on
securities available for sale (427)
--------
Balance, March 31, 1997 $ 51,185
========
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At March 31, 1997, each of Cardinal's financial institution
subsidiaries met all applicable regulatory capital requirements. Also at that
date, Cardinal had Tier I risk-based capital, total risk based capital and
leverage ratios of 10.58%, 11.83% and 7.35%, respectively. All capital ratios
are in compliance with regulatory minimum requirements.
NEW ACCOUNTING PRINCIPLES
In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128 "Earnings Per Share" and SFAS No. 129 "Disclosure of
Information About Capital Structure." SFAS No. 128 simplifies the computation of
earnings per share ("EPS") by replacing the presentation of primary EPS with a
presentation of basic EPS. The Statement requires dual presentation of basic and
diluted EPS by entities with complex capital structures. Basic EPS includes no
dilution and is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could share in the
earnings of and entity, similar to fully diluted EPS.
This Statement is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods, and requires
restatement of all prior period EPS data presented. Cardinal does not expect the
implementation of this Statement to have a material effect on the consolidated
financial statements.
SFAS No. 129 establishes standards for disclosing information about an
entity's capital structure. This Statement contains no charge in disclosure
requirements for companies that were subject to previously existing
requirements. This Statement was issued to eliminate the exemption of nonpublic
entities from certain previously issued disclosure requirements.
This Statement is effective for financial statements for periods ending
after December 15, 1997. The implementation of this Statement will not have a
material effect on Cardinal's consolidated financial statements.
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K -- There were no reports on Form 8-K
filed for three months ended March 31, 1997.
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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.
CARDINAL BANCSHARES, INC.
/s/ John S. Penn
-----------------------------------
John S. Penn
President & Chief Executive Officer
/s/ Jack H. Brown
-----------------------------------
Jack H. Brown
Chief Financial Officer
Principal Accounting Officer
Date: May 6, 1997