SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934: For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 Commission File No. 0-9785
TRI CITY BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1158740
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
6400 South 27th Street
Creek, Wisconsin 53154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 761-1610
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
$1.00 Par Value Common Stock
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) (2) and has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X ]
As of March 1, 2002, 2,629,834 shares of common stock were outstanding and the
aggregate market value of the shares held by non-affiliates was approximately
$39,169,870.
DOCUMENTS INCORPORATED BY REFERENCE
Document Incorporated in
- -------------------------- ---------------
Annual report to shareholders for fiscal year Parts II and IV
ended December 31, 2001
Proxy statement for annual meeting of shareholders
to be held on June 12, 2002 Part III
Form 10-K Table of Contents
- -------------------------------------------------------------------------------
PART I
Item 1 Business 1
Item 2 Properties 16
Item 3 Legal Proceedings 18
Item 4 Submission of Matters to a Vote of Security Holders 18
PART II
Item 5 Market for the Registrant's Common Equity and Related
Stockholder Matters 19
Item 6 Selected Financial Data 19
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
Item 7A Quantitative and Qualitative Disclosures About Market Risk 19
Item 8 Consolidated Financial Statements and Supplementary Data 19
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 19
PART III
Item 10 Directors and Executive Officers of the Registrant 20
Item 11 Executive Compensation 20
Item 12 Security Ownership of Certain Beneficial Owners
and Management 20
Item 13 Certain Relationships and Related Transactions 20
PART IV
Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 21
Signatures 24
PART I
Item 1. BUSINESS
General
Tri City Bankshares Corporation ("Registrant"), a registered bank holding
company, is a Wisconsin corporation organized in 1970 which provides commercial
banking services in the metropolitan Milwaukee area through its wholly-owned
subsidiary Tri City National Bank (the "Bank").
On a consolidated basis at December 31, 2001, Registrant had assets of
$602,772,985, net loans of $368,010,812, deposits of $521,269,309 and
stockholders' equity of $74,865,449. Registrant's primary function is to
coordinate the banking policies and operations of the Bank in order to improve
and expand its banking services in its operation by joint efforts in certain
areas such as auditing, regulatory compliance, training of personnel,
advertising, proof and bookkeeping, and business development. Registrant's
services are furnished through officers of Registrant who are also officers of
the Bank. Registrant's primary sources of revenue are (1) dividends paid on the
shares of the subsidiary bank's stock which it owns and (2) management fees in
payment for the services it provides to the Bank.
Registrant is engaged in only one business segment, namely commercial banking.
The Registrant's banking business is principally conducted by one commercial
bank bearing the "Tri City" name. The Bank is supervised by the Office of the
Comptroller of the Currency and its deposits are insured by the Federal Deposit
Insurance Corporation. The Bank provides full-service banking to individuals and
businesses, including checking and savings accounts, commercial and consumer
loans, installment loans, real estate and mortgage loans, manufactured housing
loans, credit cards, and personal reserve accounts. The Bank maintains an
investment portfolio consisting primarily of U.S. agency and state and political
subdivision securities. Certain bank locations have drive-in banking facilities.
The following table sets forth certain information regarding Tri City National
Bank:
Name of Bank and Assets as of
Location Year Organized December 31, 2001
-------- -------------- -----------------
Tri City National Bank 1963 $602,772,938
6400 South 27th Street
Oak Creek, Wisconsin
Supervision and Regulation
As a registered bank holding company, the Registrant is subject to regulation
and examination by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Company Act, as amended (the
"BHCA"). The Bank is subject to regulation and examination by the Office of the
Comptroller of the Currency.
Under the BHCA, the Registrant is subject to periodic examination by the Federal
Reserve Board, and is required to file with the Federal Reserve Board periodic
reports of its operations and such additional information as to act as a source
of financial strength to the Bank and to commit resources to support the Bank in
circumstances where the Registrant might not do so absent such policy. In
addition, there are numerous federal and state laws and regulations which
regulate the activities of the Registrant, the Bank, and its non-bank
subsidiaries. They include requirements and limitations relating to capital and
reserve requirements, permissible investments and lines of business,
transactions with affiliates, loan limits, mergers and acquisitions, issuance of
securities, dividend payments, inter-affiliate liabilities, extensions of credit
and branch banking.
Federal banking regulatory agencies have established capital adequacy rules
which take into account risk attributable to balance sheet assets and
off-balance sheet activities. All banks and bank holding companies must meet a
minimum total risk-based capital ratio of 8%, of which at least one-half must be
comprised of core capital elements defined as Tier 1 capital (which consists
principally of shareholders' equity). The federal banking agencies also have
adopted leverage capital guidelines which banking organizations must meet. Under
these guidelines, the most highly rated banking organizations must meet a
minimum leverage ratio of at least 3% Tier 1 capital to total assets, while
lower rated banking organizations must maintain a ratio of at least 4% to 5%.
Failure to meet minimum capital requirements can initiate certain mandatory -
and possible additional discretionary - actions by regulators that, if
undertaken, could have a direct material effect on the consolidated financial
statements. The risk-based and leverage standards presently used by the Federal
Reserve Board are minimum requirements, and higher capital levels will be
required it warranted by the particular circumstances or risk profiles of
individual banking organizations. The Federal Reserve Board has not advised the
Company of any specific minimum Tier 1 capital leverage ratio applicable to it.
Federal law provides the federal banking regulators with broad power to take
prompt corrective action to resolve the problems of undercapitalized
institutions. The extent of the regulators' power depends on whether the
institution in question is "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," or "critically
undercapitalized." To be well capitalized under the regulatory framework, the
Tier 1 capital ratio must meet or exceed 6%, the total capital ratio must meet
or exceed 10% and the leverage ratio must meet or exceed 5%. At December 31,
2001, the Company was categorized as well capitalized under the regulatory
framework for prompt corrective action. There are no conditions or events since
that notification that management believes have changed the Company's category.
As of December 31, 2001, the Bank had a total risk-based capital ratio of 19.8%,
a Tier 1 risk-based capital ratio of 17.86% and a leverage ratio of 11.95%. The
Bank was deemed well capitalized as of December 31, 2001 and 2000.
Current federal law provides that the adequately capitalized and managed bank
holding companies from any state may acquire banks and bank holding companies
located in any other state, subject to certain conditions. Banks are permitted
to create interstate branching networks in states that do not "opt out" of
interstate branching.
The laws and regulations to which the Company is subject are constantly under
review by Congress, regulatory agencies and state legislatures. In 1999,
Congress enacted the Gramm-Leach-Bliley Act (the "Act"), which eliminated
certain barriers to and restrictions on affiliations between banks and
securities firms, insurance companies and other financial services
organizations. Among other things, the Act repealed certain Glass-Steagall Act
restrictions on affiliations between banks and securities firms, and amended the
BHCA to permit bank holding companies that qualify as "financial holding
companies" to engage in a broad list of "financial activities," and any
non-financial activity that the Federal Reserve Board, in consultation with the
Secretary of the Treasury, determines is "complementary" to a financial activity
and poses no substantial risk to the safety and soundness of depository
institutions or the financial system. The Act treats various lending, insurance
underwriting, dealing and market-making, and merchant banking activities as
financial in nature for this purpose.
Under the Act, a bank holding company may become certified as a financial
holding company by filing a notice with the Federal Reserve Board, together with
a certification that the bank holding company meets certain criteria, including
capital, management, and Community Reinvestment Act requirements. The Company
has determined not to become certified as a financial holding company at this
time. The Company may reconsider this determination in the future.
Capital Requirements
See footnote 8 to the audited financial statements, incorporated by reference in
Item 8, below, for a discussion of the capital requirements of the Registrant
and the Bank.
Monetary Policy
Registrant's operations and earnings are affected by the credit policies of
monetary authorities, including the Federal Reserve System, which regulates the
national supply of bank credit. Such regulation influences overall growth of
bank loans, investments, and deposits, and may also affect interest rates
charged on loans and paid on deposits. The monetary policies of the Federal
Reserve authorities have had a significant effect on the operating results of
bank holding companies and commercial banks in the past and are expected to
continue to do so in the future.
Competition
All of the Registrant's banking facilities are located in Milwaukee, Waukesha,
Racine and Ozaukee Counties. Accordingly, the Bank competes with all the major
banks and bank holding companies located in metropolitan Milwaukee, most of whom
are far larger in terms of assets and deposits. The banking industry in this
area is highly competitive and the Bank faces vigorous competition not only from
the many banks in the area, but from other financial institutions such as
savings and loan associations, credit unions, and finance companies.
Employees
At December 31, 2001, Registrant employed 98 officers and 315 employees in
total. Employees are provided a variety of employment benefits and Registrant
considers its employee relations to be excellent.
The following pages set forth the statistical data required by Guide 3 of the
Securities and Exchange Commission Guides for Preparation and Filing of Reports
and Registration Statements and Reports.
DISTRIBUTION OF ASSETS, LIABILITIES & STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
(Dollars in Thousands)
The following table shows average assets, liabilities and stockholders' equity;
the interest earned and average yield on interest-earning assets; the interest
paid and average rate on interest-bearing liabilities, the net interest
earnings, the net interest rate spread and the net yield on interest-earning
assets for the years ended December 31, 2001, 2000 and 1999.
Year Ended December 31
2001 2000 1999
-------- -------- --------
Average Yield Average Yield Average Yield
Balance Interest or Rate Balance Interest or Rate Balance Interest or Rate
ASSETS
Interest-earning assets:
Loans (1) $371,031 $ 31,966 8.62% $342,806 $ 30,592 8.92% $296,868 $ 25,912 8.73%
Taxable investment securitie 48,280 2,834 5.87 57,411 3,481 6.06 63,106 3,891 6.17
Nontaxable investment securi 73,031 4,892 6.70 80,328 5,350 6.66 84,695 5,731 6.77
Federal funds sold 25,820 846 3.28 14,285 895 6.27 4,146 203 4.90
-------- -------- ------- -------- -------- -------- -------- -------- -------
Total interest-earning asset 518,162 40,538 7.82% 494,830 40,318 8.15% 448,815 35,737 7.96%
Noninterest-earning assets:
Other Assets 51,744 51,353 58,417
-------- -------- --------
$569,906 $546,183 $507,232
======== ======== =========
DISTRIBUTION OF ASSETS, LIABILITIES & STOCKHOLDERS' EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL (Continued)
(Dollars in Thousands)
Year Ended December 31
2001 2000 1999
---- ---- ----
Average Yield Average Yield Average Yield
Balance Interest Or Rate Balance Interest Or Rate Balance Interest Or Rate
-------- -------- ------- -------- -------- ------- -------- -------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings deposits $201,210 $ 3,869 1.92% $197,085 $ 5,022 2.55% $196,559 $ 4,758 2.42%
Other time deposits 146,331 7,992 5.46 116,603 6,361 5.46 113,791 5,745 5.05
Short-term borrowings 19,705 748 3.80 37,187 2,258 6.07 8,796 460 5.23
-------- -------- ------ -------- ------- ------- -------- -------- -------
Total interest-bearing liabilities 367,246 12,609 3.43 350,875 13,641 3.89 319,146 10,963 3.44
Noninterest-bearing liabilities:
Demand deposits 128,623 126,933 124,696
Other 2,960 2,948 3,246
Stockholders' equity 71,077 65,427 60,144
-------- -------- --------
$569,906 $546,183 $507,232
======== ======== ========
Net interest earnings and interest
rate spread $ 27,929 4.39% $26,677 4.26% $ 24,774 4.52%
======== ====== ======= ====== ======== =======
Net yield on interest-earning assets 5.39% 5.39% 5.52%
====== ====== ======
(1) For purposes of these computations, nonaccrual loans are included in the
daily average loan amounts outstanding. Interest income includes $2,154,
$1,836 and $1,736 of loan fees in 2001, 2000 and 1999, respectively.
(2) Nontaxable investment securities income has been stated on a fully taxable
equivalent basis using a 34% adjusting rate. The related tax equivalent
adjustment for calculations of yield was $1,622, $1,755 and $1,949 in 2001,
2000 and 1999, respectively.
INTEREST INCOME AND EXPENSE VOLUME AND RATE CHANGE
(Dollars in Thousands)
The following table sets forth, for the periods indicated, a summary of the
changes in interest earned (on a fully taxable equivalent basis) and interest
paid resulting from changes in volume and changes in rates:
2001 Compared to 2000 2000 Compared to 1999
--------------------- ---------------------
Increase (Decrease) Due to Increase (Decrease) Due to
--------------------------- --------------------------
Volume Rate(1) Net Volume Rate(1) Net
-------- -------- -------- -------- -------- --------
Interest earned on:
Loans $ 2,518 $(1,144) $ 1,374 $ 4,010 $ 670 $ 4,680
Taxable investment securities (553) (94) (647) (351) (59) (410)
Nontaxable investment securities (486) 28 (458) (296) (85) (381)
Federal funds sold 723 (772) (49) 497 195 692
-------- -------- -------- -------- -------- --------
Total interest-earning assets $ 2,202 $(1,982) $ 220 $ 3,860 $ 721 $ 4,581
======== ======== ======== ======== ========= =========
Interest paid on:
Savings deposits $ 105 $(1,258) $(1,153) $ 13 $ 251 $ 264
Other time deposits 1,622 9 1,631 142 474 616
Short-term borrowings (1,061) (449) (1,510) 1,488 310 1,798
-------- -------- -------- -------- --------- ---------
Total interest-bearing liabilities $ 666 $(1,698) $(1,032) $ 1,643 $ 1,035 $ 2,678
======== ======== ======== ======== ========= =========
Increase in net interest income $ 1,252 $ 1,903
======== =========
(1) The change in interest due to both rate and volume has been allocated to
rate changes.
INVESTMENT PORTFOLIO
(Dollars in Thousands)
The following table sets forth the maturities of investment securities at
December 31, 2001, the weighted average yields of such securities (calculated on
the basis of the cost and effective yields weighted for the scheduled maturity
of each security) and the tax-equivalent adjustment used in calculating the
yields.
Maturity
After One But After Five But
Within One Year Within Five Years Within Ten Years
--------------- ----------------- ----------------
Amount Yield Amount Yield Amount Yield
-------- ------ -------- ------ -------- ------
U.S. Treasury and government agencies $ 4,000 5.61% $ 62,000 5.07% $ 5,000 5.88%
States and political subdivisions 12,275 6.56 55,747 6.53 4,732 6.94
-------- ------ -------- ------ -------- ------
$ 16,275 6.33% $117,747 5.76% $ 9,732 6.40%
======== ====== ======== ====== ======== ======
Tax equivalent adjustment for
Calculation of yield $ 265 $ 1,246 $ 111
======== ======== ========
Note: The weighted average yields on tax-exempt obligations have been computed
on a fully tax-equivalent basis assuming a tax rate of 34%.
LOAN PORTFOLIO
(Dollars in Thousands)
The maturity distribution of all loans at December 31, 2001, are:
Maturity
After One
One Year Through After
or Less Five Years Five Years Total
Commercial $ 19,939 $ 21,648 $ -0- $ 41,587
Real estate construction 17,407 10,856 -0- 28,263
Real estate mortgage 100,192 169,736 3,137 273,065
Installment Loans 5,404 18,602 5,917 29,923
--------- --------- --------- ---------
$ 142,942 $ 220,842 $ 9,054 $ 372,838
========= ========= ========= =========
Interest rate sensitivity of all loans with maturities greater than one year
at December 31, 2001, are:
Interest Sensitivity
Fixed Rate Variable Rate
Due after one, but within five years $ 214,306 $ 6,536
Due after five years 9,054 -0-
--------- ---------
$ 223,360 $ 6,536
========= =========
LOAN PORTFOLIO (Continued)
(Dollars in Thousands)
The following table presents information concerning the aggregate amount of
nonperforming loans. Nonperforming loans are comprised of (a) loans accounted
for on a nonaccrual basis and (b) loans contractually past due 90 days or more
as to interest or principal payments, for which interest continues to be
accrued.
December 31
2001 2000 1999 1998 1997
------ ------ ------ ------ ------
Loans accounted for on a
nonaccrual basis $ 128 $ 214 $ 595 $ 334 $ -0-
Loans contractually past
due 90 days or more as
to interest or principal
payments 2,511 1,669 1,372 1,848 694
------ ------ ------ ------ ------
Total nonperforming loans $2,639 $1,883 $1,967 $2,182 $ 694
====== ====== ====== ====== ======
Ratio of nonaccrual loans
to total loans .03% .06% .19% .12% 0%
Ratio of nonperforming
loans to total loans .71 .52 .62 .79 .26
Interest income of $8,000 was recognized during 2001 on loans which were
accounted for on a nonaccrual basis. An additional $14,000 of interest income
would have been recorded in 2001 under the original loan terms had these loans
not been assigned nonaccrual status.
The accrual of interest income is generally discontinued when a loan becomes 90
days past due as to principal or interest. Registrant's management may continue
the accrual of interest when the estimated net realizable value of collateral is
sufficient to cover the principal balance and accrued interest.
There were no other loans at December 31, 2001 or 2000 whose terms had been
renegotiated to provide a reduction or deferral of interest or principal because
of a deterioration in the financial position of the borrower, and there are no
current loans where, in the opinion of management, there are serious doubts as
to the ability of the borrower to comply with present loan repayment terms.
Loans defined as impaired by Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan," if any, are included in
nonaccrual loans above.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in Thousands)
The following table summarizes loan loss allowance balances at the beginning and
end of each year; changes in the allowance for loan losses arising from loans
charged off and recoveries on loans previously charged-off, by loan category;
additions to the allowance which have been charged to expense; and selected
performance ratios.
Year Ended December 31
2001 2000 1999 1998 1997
------ ------ ------ ------ ------
Balance of allowance for
loan losses at beginning
of period $4,521 $4,340 $4,245 $3,500 $3,010
Loans charged-off:
Commercial 0 130 116 0 57
Real estate 38 62 9 0 0
Installment 128 9 61 154 97
------ ------ ------ ------ ------
TOTAL LOANS CHARGED-OFF 166 201 186 154 154
Recoveries of loans
previously charged-off:
Commercial 11 37 12 0 20
Real estate 21 0 0 244 0
Installment 20 45 44 55 24
------ ------ ------ ------ ------
TOTAL RECOVERIES 52 82 56 299 44
------ ------ ------ ------ ------
Net loans charged-off
(recovered) 114 119 130 (145) 110
Additions to allowance
charged to expense 420 300 225 600 600
------ --- ------ ------ ------
Balance at end of period $4,827 $4,521 $4,340 $4,245 $3,500
====== ====== ====== ====== ======
Ratio of net loans charge-
off (recoveries)
during the period to
average loans outstanding .03% .03% .04% (.05%) .04%
====== ====== ====== ====== ======
Ratio of allowance at end
of year to total loans 1.29% 1.25% 1.36% 1.53% 1.31%
====== ====== ====== ====== ======
Ratio of allowance at end
of year to nonaccrual
loans 3,771.33% 2,112.83% 729.41% 1,270.96% NMF*
========= ========= ======= ========= ======
*Data not meaningful
The additions to the allowance charged to operating expense is the amount
necessary to bring the allowance for loan losses to a level which will provide
for known and estimable losses in the loan portfolio. The adequacy of the
allowance is based principally upon continuing management review for potential
losses in the portfolio, actual charge-offs during the year, historical loss
experience, current and anticipated economic conditions, estimated value of
collateral and industry guidelines.
Management evaluates the adequacy of the allowance for loan losses on an overall
basis as opposed to allocating the allowance to specific categories of loans.
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in Thousands)
The Bank has a loan committee which meets periodically. Its function is to
review new loan applications and to ensure adherence to the written loan and
credit policies of the Bank. The Committee also reviews a summary of the loan
portfolio by risk categories monthly. Loans are reviewed quarterly or as
necessary as to proper classification.
1. Absence of any significant credit risk
2. Presence of normal, but not undue, credit risk.
3. Presence of greater than normal credit risk.
4. Excess credit risk requiring continuous monitoring.
5. Doubtful and loss.
The balance in each of the aforementioned categories serves as a guideline in
determining the adequacy of the allowance for loan losses and the provision
required to bring this balance to a level necessary to absorb the present and
potential risk characteristics of the loan portfolio.
The Bank's loan committee also considers collection problems which may exist.
Loans with contractual payments more than 90 days past due are reviewed. If
collection possibilities are considered to be remote, the loan is charged-off to
the allowance for loan losses. Should any special circumstances exist, such as a
reasonable belief that the loan may ultimately be paid or be sufficiently
secured by collateral having established marketability, the loan may be
rewritten, carried in a nonaccrual of interest status or charged-off to the
level of expected recovery.
Real estate loans comprise the largest portion of the loan portfolio with 80.82%
of loans outstanding at December 31, 2001. The majority of the real estate loan
portfolio consists of residential mortgage loans, an area in which the
Registrant has had few losses in past years.
In the installment loan category, which includes auto loans, home improvement
loans, and credit card loans, among others, management considers the historical
net loss experience to be the best indicator of future losses.
The remainder of the loan portfolio consists of commercial loans. While these
loans carry the greatest exposure to risk of loss, that exposure is limited to
problems associated with particular companies, rather than to specific
industries, which are generally more difficult to predict.
Losses in 2002 are not expected to vary significantly from net losses
experienced over the last two years.
DEPOSITS
(Dollars in Thousands)
The average daily balance of deposits and the average rate paid on deposits is
summarized for the periods indicated in the following table:
Year Ended December 31
----------------------
2001 2000 1999
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
Noninterest-bearing demand deposits $128,623 0% $126,933 0% $124,696 0%
Interest bearing transaction deposits 91,384 2.24% 88,022 2.94% 86,364 2.52%
Savings 109,826 1.66% 109,063 2.23% 110,195 2.35%
Time deposits (excluding time certificates
of deposit of $100,000 or more)
98,184 5.29% 87,184 5.46% 84,084 5.22%
Time certificates of deposits of $100,000
or more 48,147 5.81% 29,419 5.44% 29,707 4.56%
-------- -------- --------
$476,164 $440,621 $435,046
======== ======== ========
The maturity distribution of deposits in amounts of $100,000 and over at
December 31, 2001, is:
Three months or less $ 14,494
After 3 through 6 months 10,943
After 6 through 12 months 6,721
After 1 year through 2 years 7,519
After 2 years through 3 years 450
After 3 years through 4 years 3,084
After 4 years through 6 years 4,935
--------
$ 48,146
RETURN ON EQUITY AND ASSETS AND SELECTED CAPITAL RATIOS
The following table shows consolidated operating and capital ratios of the
Registrant for each of the last three years:
Year Ended December 31
2001 2000 1999 1998 1997
------ ------ ------ ------ ------
Percentage of net income to:
Average stockholders equity 10.72% 12.04% 11.66% 12.65% 12.91%
Average total assets 1.34 1.44 1.38 1.50 1.49
Percentage of dividends
declared per common share
to net income per common
share 52.05 45.45 43.32 36.10 32.69
Percentage of average
stockholders' equity to
daily average total assets 12.47 11.98 11.86 11.84 11.53
SHORT-TERM BORROWINGS
(Dollars in Thousands)
Information relating to short-term borrowings follows:
Federal Funds Purchased
and Securities Sold Under Other Short-Term
Agreements to Repurchase Borrowings
------------------------- ----------------
Balance at December 31:
2001 $ 3,250 $ 1,429
2000 19,787 2,233
1999 0 4,579
Weighted average interest
rate at year end:
2001 1.32% 1.71%
2000 6.29 6.32
1999 0 5.55
Maximum amount outstanding
at any month's end:
2001 $ 22,526 $ 5,479
2000 76,891 5,347
1999 15,650 6,006
Average amount outstanding
during the year:
2001 $ 17,621 $ 2,084
2000 35,148 2,038
1999 6,863 1,933
Average interest rate during
the year:
2001 3.83% 3.51%
2000 6.05 6.48
1999 5.14 4.75
Federal funds purchased and securities sold under agreements to repurchase
generally mature within one to four days of the transaction date. Notes payable
mature in one year and are renewable for a like term. Other short-term
borrowings generally mature within 90 days.
Item 2. PROPERTIES
Tri City National Bank has thirty locations in the Metropolitan Milwaukee area.
The Bank owns buildings at fourteen locations in Oak Creek, Milwaukee,
Brookfield, Menomonee Falls, West Allis, Hales Corners, Wauwatosa, Cedarburg,
Sturtevant and South Milwaukee. Approximately 92,217 square feet is leased to
third parties; such square footage is not shown above.
Registrant believes that its bank locations are in buildings that are attractive
and efficient, and adequate for their operations, with sufficient space for
parking and drive-in facilities. Fifteen full-service banking centers are
located in metropolitan Milwaukee food discount centers.
Item 3. LEGAL PROCEEDINGS
There are currently no material legal proceedings, except those disclosed in the
footnotes to the financial statements, pending against Registrant or its
subsidiary bank; however, the bank is involved from time to time in routine
litigation incident to the conduct of its business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted during the fourth quarter of 2001 to a vote of
security holders through the solicitation of proxies or otherwise.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
-----------------------------------------------------
STOCKHOLDER MATTERS
-------------------
The information required by Item 5 is incorporated herein by reference to
Registrant's 2001 Annual Report to Stockholders under the captions entitled
"Market for Corporation's Common Stock and Related Stockholder Matters" (Page
14) and "Selected Financial Data" (Page 13) as to cash dividends paid.
Item 6. SELECTED FINANCIAL DATA
-----------------------
The information required by Item 6 is incorporated herein by reference to
Registrant's 2001 Annual Report to Stockholders under the caption entitled
"Selected Financial Data" (Page 13).
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The information required by Item 7 is incorporated herein by reference to
Registrant's 2001 Annual Report to Stockholders under the caption entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" (Pages 4 to 10).
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The information required by Item 7A is incorporated herein by reference to
Registrant's 2001 Annual Report to Stockholders under the caption entitled
"Quantitative and Qualitative Disclosures About Market Risk" (Pages 11 to 12).
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------
The information required by Item 8 is incorporated herein by reference to
Registrant's 2001 Annual Report to Stockholders (Pages 16 to 38).
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
----------------------------------------------
The information required by Item 10 is incorporated herein by reference to
Registrant's definitive Proxy Statement for its annual meeting of stockholders
on June 12, 2002, under the caption entitled "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance which definitive Proxy
Statement will be filed with the Securities and Exchange Commission pursuant to
Rule 14a-6(b).
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference to
Registrant's definitive Proxy Statement for its annual meeting of stockholders
on June 12, 2002, under the caption entitled "Executive Compensation" which
definitive Proxy Statement will be filed with the Securities and Exchange
Commission pursuant to Rule 14a-6(b).
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information required by Item 12 is incorporated herein by reference to
Registrant's definitive Proxy Statement for its annual meeting of stockholders
on June 12, 2002, under the caption entitled "Security Ownership of Certain
Beneficial Owners and Management" which definitive Proxy Statement will be filed
with the Securities and Exchange Commission pursuant to Rule 14a-6(b).
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The information required by Item 13 is incorporated herein by reference to
Registrant's definitive Proxy Statement for its annual meeting of stockholders
on June 12, 2002, under the caption entitled "Loans and Other Transactions with
Management" which definitive Proxy Statement will be filed with the Securities
and Exchange Commission pursuant to Rule 14a-6(b).
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) (1) and (2) Financial statements and financial statement schedules
-----------------------------------------------------------------
The response to this portion of Item 14 is submitted as a separate
section of this report.
(3) Listing of Exhibits
Exhibit 3.1--Restated Articles of incorporation(incorporated
herein by reference to Exhibit 3.1 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 2000).
Exhibit 3.2--By-Laws, (incorporated herein by reference to
Exhibit 3.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 2000).
Exhibit 13--Annual Report to Stockholders for the year ended
December 31, 2001.
With the exception of the information
incorporated by reference into Items 5,
6, 7, 7A, and 8 of this Form 10-K, the 2001
Annual Report to Stockholders is not
deemed filed as part of this report.
Exhibit 21--Subsidiary of Registrant.
Exhibit 23--Consent of Independent Auditors
(b) Reports on Form 8-K
None
(c) Exhibits--The response to this portion of Item 14 is submitted
as a separate section of this report.
(d) Financial Statement Schedules--None
PART IV
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1), (2) and (c)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES
CERTAIN EXHIBITS
Year Ended December 31, 2001
TRI CITY BANKSHARES CORPORATION
OAK CREEK, WISCONSIN
FORM 10-K-ITEM 14(a)(1) and (2)
TRI CITY BANKSHARES CORPORATION
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements and report of independent
auditors of Tri City Bankshares Corporation, included in the annual report of
the Registrant to its stockholders for the year ended December 31, 2001, are
incorporated by reference in Item 8:
Consolidated balance sheets-December 31, 2001 and 2000
Consolidated statements of income-Years ended December 31,
2001, 2000 and 1999
Consolidated statements of stockholders' equity-Years ended December 31,
2001, 2000 and 1999
Consolidated statements of cash flows-Years ended December 31,
2001, 2000 and 1999
Notes to consolidated financial statements-December 31, 2001
Report of independent auditors
Schedules to the consolidated financial statements required by Article 9 of
Regulation S-X are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TRI CITY BANKSHARES CORPORATION
BY: /s/Henry Karbiner, Jr.
Henry Karbiner, Jr., President
Date: March 13, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Capacity Date
/s/Henry Karbiner, Jr. Chairman of the Board and Chief 3/13/02
Henry Karbiner, Jr. Executive Officer
/s/Ronald K. Puetz Executive Vice-President 3/13/02
Ronald K. Puetz and Director
/s/Scott A. Wilson Secretary and Director 3/13/02
Scott A. Wilson
/s/Robert W. Orth Senior Vice-President 3/13/02
Robert W. Orth and Director
/s/Thomas W. Vierthaler Vice President and Comptroller 3/13/02
Thomas W. Vierthaler (Principal Accounting Officer)
/s/Frank J. Bauer Director 3/13/02
Frank J. Bauer
/s/Sanford Fedderly Director 3/13/02
Sanford Fedderly
/s/William Gravitter Director 3/13/02
William Gravitter
/s/Christ Krantz Director 3/13/02
Christ Krantz
/s/William L. Komisar Director 3/13/02
William L. Komisar
/s/William P. McGovern Director 3/13/02
William P. McGovern
/s/Agatha T. Ulrich Director 3/13/02
Agatha T. Ulrich
/s/David A. Ulrich, Jr. Director 3/13/02
David A. Ulrich, Jr.
/s/William J. Werry Director 3/13/02
William J. Werry
EXHIBIT 21
SUBSIDIARY OF REGISTRANT
Name Percentage of Shares Owned
Tri City National Bank 100.0%
(Wisconsin Corporation)
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Tri City Bankshares Corporation of our report dated February 20, 2002 with
respect to the consolidated financial statements of Tri City Bankshares
Corporation, included in the Annual Report to Stockholders of Tri City
Bankshares Corporation for the year ended December 31, 2001.
We also consent to the incorporation by reference in the Registration Statement
(Form S-3) of Tri City Bankshares Corporation pertaining to the Automatic
Dividend Reinvestment Plan of Tri City Bankshares Corporation and in the related
Prospectus of our report dated February 20, 2002, with respect to the
consolidated financial statements of Tri City Bankshares Corporation
incorporated by reference in this Annual Report (Form 10-K) for the year ended
December 31, 2001.
/s/ Ernst & Young
Milwaukee, Wisconsin
March 29, 2002