FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-9785
TRI CITY BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1158740
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
6400 S. 27th Street, Oak Creek, WI
(Address of principal executive offices)
53154
Zip Code
(414) 761-1610
(Registrant's telephone number,
including area code)
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 such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES NO X
--- ---
The number of shares outstanding of $1.00 par value common stock, as of June 30,
2003: 8,146,062
FORM 10-Q
TRI CITY BANKSHARES CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Page #
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets as of
June 30, 2003 and December 31, 2002 3
Consolidated Statements of Income
for the Three Months ended June 30, 2003
and 2002 4
Consolidated Statements of Income
for the Six Months ended June 30, 2003
and 2002 5
Consolidated Statements of Cash Flows
for the Six Months ended June 30, 2003
and 2002 6
Notes to Unaudited Consolidated Financial
Statements 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 3 Quantitative and Qualitative Disclosures
About Market Risk 15
Item 4 Controls and Procedures 15
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 6 Exhibits and Reports on Form 8-K 19
Signatures 20
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
2003 2002
----------- ------------
(Unaudited)
Cash and due from banks $ 27,404,249 $ 38,804,170
Federal funds sold 9,736,279 11,504,760
------------ ------------
Cash and cash equivalents 37,140,528 50,308,930
Investment securities:
Held-to-maturity (fair value of
2003 - $172,409,519
2002 - $166,747,283) 168,463,886 162,622,215
Loans 392,407,617 397,783,699
Allowance for loan losses (5,149,172) (5,118,705)
------------ ------------
Net Loans 387,258,445 392,664,994
Premises and equipment 22,025,977 22,188,798
Mortgage servicing rights 990,807 789,903
Other assets 4,229,292 4,116,888
------------ ------------
TOTAL ASSET $ 620,108,935 $ 632,691,728
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 529,195,639 $ 543,184,250
Reverse repurchase agreements 1,108,000 1,500,000
Short-term borrowings 4,468,207 6,000,000
Other Liabilities 1,824,183 2,169,212
------------ ------------
TOTAL LIABILITIES 536,596,029 552,853,462
STOCKHOLDERS' EQUITY:
Common stock, $1 par value:
Authorized - 15,000,000 shares
Issued and outstanding:
2003 - 8,146,062 shares;
2002 - 8,062,536 shares 8,146,062 8,062,536
Additional paid in capital 12,600,225 11,243,343
Retained earnings 62,766,619 60,532,387
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 83,512,906 79,838,266
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 620,108,935 $ 632,691,728
============ ============
See Notes to Unaudited Consolidated Financial Statements
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
Interest income:
Loans, including fees $ 6,956,574 $ 7,403,231
Investment securities:
Taxable 782,030 892,333
Exempt from federal income tax 777,432 760,995
Federal funds sold 36,736 64,277
----------- ----------
TOTAL INTEREST INCOME 8,552,772 9,120,836
Interest expense:
Deposits 1,290,844 2,008,209
Short-term borrowings 7,099 7,789
----------- ----------
TOTAL INTEREST EXPENSE 1,297,943 2,015,998
----------- ----------
NET INTEREST INCOME 7,254,829 7,104,838
Provision for loan losses 105,000 105,000
----------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,149,829 6,999,838
Other income:
Service charge income 748,596 708,350
Rental income 282,518 365,811
Gain on sale of loans and
servicing fees 550,680 52,800
Other 865,482 791,708
----------- ----------
TOTAL OTHER INCOME 2,447,276 1,918,669
Other expense:
Salaries and employee benefits 3,480,526 3,304,823
Net occupancy 769,278 841,402
Equipment 445,832 438,542
Data processing 392,887 332,039
Advertising 174,643 179,947
Regulatory agency assessments 57,758 56,455
Office Supplies 129,889 120,290
Litigation Settlement - 2,800,000
Other 650,504 655,396
----------- ----------
TOTAL OTHER EXPENSE 6,101,317 8,728,894
----------- ----------
Income before income taxes 3,495,788 189,613
Provision for income taxes 1,035,000 300,000
----------- ----------
NET INCOME $ 2,460,788 $ 489,613
=========== ==========
Per share data:
Net income $ 0.300 $ 0.060
Dividends per share $ 0.160 $ 0.143
Average shares outstanding 8,137,966 7,971,030
See Notes to Unaudited Consolidated Financial Statements.
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
Interest income:
Loans, including fees $ 13,933,342 $ 14,900,710
Investment securities:
Taxable 1,600,928 1,793,342
Exempt from federal income tax 1,543,932 1,530,677
Federal funds sold 47,840 102,699
------------ ------------
TOTAL INTEREST INCOME 17,126,042 18,327,428
Interest expense:
Deposits 2,668,462 4,119,479
Short-term borrowings 18,169 58,952
------------ ------------
TOTAL INTEREST EXPENSE 4,178,431
------------ ------------
NET INTEREST INCOME 14,439,411 14,148,997
Provision for loan losses 210,000 210,000
------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 14,229,411 13,938,997
Other income:
Service charge income 1,460,392 1,416,617
Rental income 571,394 729,540
Gain on sale of loans and
servicing fees 971,438 205,754
Other 1,706,224 1,655,828
------------ ------------
TOTAL OTHER INCOME 4,709,448 4,007,739
Other expenses:
Salaries and employee benefits 6,938,484 6,607,926
Occupancy 1,558,549 1,664,121
Equipment 855,224 868,474
Data processing 767,321 650,823
Advertising 346,427 331,491
Regulatory agency assessments 116,174 112,502
Office Supplies 270,024 255,043
Litigation Settlement - 4,250,000
Other 1,257,603 1,365,650
------------ ------------
TOTAL OTHER EXPENSES 12,109,806 16,106,030
------------ ------------
Income before income taxes 6,829,053 1,840,706
Income taxes 2,008,000 28,000
------------ ------------
NET INCOME $ 4,821,053 $ 1,868,706
============ ============
Net income per share $ 0.590 $ 0.240
Dividends per share 0.320 0.287
Average shares outstanding 8,117,639 7,948,488
See Notes to Unaudited Consolidated Financial Statements.
TRI CITY BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
2003 2002
OPERATING ACTIVITIES
Net income $ 4,821,053 $ 1,868,706
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 210,000 210,000
Provision for depreciation 973,767 1,004,286
Gain on sale of loans (1,332,575) (268,579)
Proceeds from sale of loans
held for sale 74,882,267 31,391,002
Origination of loans held for
sale (73,549,692) (31,122,423)
Amortization of premiums and
accretion of discounts on
investment securities 106,852 71,627
Decrease in interest receivable 171,270 126,474
Decrease in interest payable (168,698) (311,444)
Other (660,906) (721,223)
------------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 5,453,338 2,248,426
INVESTING ACTIVITIES
Held to Maturity:
Proceeds from maturities and
redemptions of investment
securities 25,991,139 24,732,706
Purchase of investment securities (31,939,660) (21,106,141)
Net decrease(increase) in loans 5,196,549 (16,246,594)
Purchases of premises and equipment (810,946) (527,637)
------------- ------------
NET CASH USED BY
INVESTING ACTIVITIES (1,562,918) (13,147,666)
FINANCING ACTIVITIES
Net (decrease) increase in deposits (13,988,611) 7,193,585
Net (decrease) increase in short-term
borrowings (1,923,793) 260,366
Sale of common stock 1,440,408 1,359,012
Cash dividends (2,586,826) (2,268,136)
------------- ------------
NET CASH (USED)PROVIDED BY
FINANCING ACTIVITIES (17,058,822) 6,544,827
------------- ------------
DECREASE IN CASH AND
CASH EQUIVALENTS (13,168,402) (4,354,413)
Cash and cash equivalents at
the beginning of the period 50,308,930 63,737,151
------------- ------------
CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD $ 37,140,528 $ 59,382,738
============= =============
See Notes to Unaudited Consolidated Financial Statements.
TRI CITY BANKSHARES CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(A) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. These financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Annual Report on Form 10-K of Tri City Bankshares
Corporation ("Tri City") for the year ended December 31, 2002. The December 31,
2002 financial information included herein is derived from the December 31, 2002
Consolidated Balance Sheet of Tri City which is included in the aforesaid Annual
Report on Form 10-K.
In the opinion of Tri City's Management, the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of normal recurring
accruals, necessary to present fairly Tri City's financial position as of June
30, 2003 and the results of its operations for the three month and six month
periods ended June 30, 2003 and 2002 and cash flows for the six months ended
June 30, 2003 and 2002. The operating results for the first six months of 2003
are not necessarily indicative of the results which may be expected for the
entire 2003 fiscal year.
TRI CITY BANKSHARES CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
This report contains statements that may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements other than historical facts contained or incorporated by reference
in this report. These statements speak of Tri City Bankshares' (the
"Corporation") plans, goals, beliefs or expectations, refer to estimates or use
similar terms. Future filings by the Corporation with the Securities and
Exchange Commission, and statements other than historical facts contained in
written material, press releases and oral statements issued by, or on behalf of
the Corporation may also constitute forward-looking statements.
Forward-looking statements are subject to significant risks and uncertainties;
and the Corporation's actual results may differ materially from the results
discussed in such forward-looking statements. Factors that might cause actual
results to differ from the results discussed in forward-looking statements
include, but are not limited to the factors set forth in exhibit 99.2 of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2002,
which exhibit is incorporated herein by reference.
All forward-looking statements contained in this report or which may be
contained in future statements made for or on behalf of the Corporation are
based upon information available at the time the statement is made and the
Corporation assumes no obligation to update any forward-looking statement.
CRITICAL ACCOUNTING POLICIES
A number of accounting policies require us to use our judgment. Two of the more
significant policies are:
o Establishing the amount of the provision for loan loss reserve. We
evaluate our loan portfolio at least quarterly to determine the
adequacy of the loan loss reserve. Included in the review are 5
components: 1) An historic review of losses and reserve coverage based
on peak and average loss volume; 2) A review of portfolio trends in
volume and composition with attention to possible concentrations; 3) A
review of delinquency trends and loan performance compared to our peer
group; 4) A review of local and national economic conditions and 5) A
quality analysis review of non-performing loans identifying
charge-offs, potential loss after collateral liquidation and credit
weaknesses requiring above normal supervision. If we misjudge the
adequacy of the reserve and experience a loss, a charge to earnings may
result.
o Establishing the value of mortgage servicing rights.
Mortgage servicing rights (MSR's) are established on loans (primarily
mortgage loans) that we originate and sell, but continue to service as
we collect the payments and tax escrows. GAAP requires that we
recognize, as income, the estimated fair market value of the asset when
originated, even though management does not intend to sell these
rights. The estimated value of MSR's is the present value of future net
cash flows from the servicing relationship using current market
assumptions for factors such as prepayments and servicing costs. As the
loans are repaid and the servicing revenue is earned MSR's are
amortized. Net servicing revenues and newly originated MSR's generally
exceed this amortization expense. However, if actual prepayment
experience is greater than anticipated, and new loan volume declines,
net servicing revenues may be less than expected and a charge to
earnings may result.
CHANGES IN FINANCIAL POSITION
During the first six months of 2003, total assets of Tri City Bankshares
Corporation (the "Corporation") have decreased $12.6 million. Cash and due from
banks has decreased $11.4 million while Federal funds sold decreased $1.8
million. Cash and cash equivalents were reduced to normal levels from seasonally
high balances in December resulting from holiday, municipal, commercial and
retail activity.
Investment securities have increased $5.8 million (3.6%) during the first six
months of 2003. Current economic conditions have resulted in reduced loan
demand. Management has chosen to deploy excess funds in investment securities.
Although yielding a lesser rate than loans, investments offer a higher rate than
federal funds sold while providing a secondary source of liquidity. Management
is continually looking for quality securities to replace maturing investments,
while maintaining an acceptable rate of return without undue risk to the
Corporation's entire portfolio.
Loan balances have decreased $5.4 million (1.4%) during the first six months of
2003. A slow economy has reduced loan demand and the opportunity for significant
growth in new business. This, coupled with prepayments by a significant number
of residential mortgage and existing business customers, has resulted in a lack
of loan growth for the Corporation's banking subsidiary. Fixed residential
mortgage interest rates at a fifty year low have prompted many banks'
residential mortgage customers using adjustable rate or short term loan products
to secure their future by locking into long term fixed rate mortgages. The
Corporation's banking subsidiary has been very active in this fixed rate
secondary mortgage program.
Commercial loan prepayments result from aggressive pricing by competitors,
offering fixed rate commercial terms of 5 to 10 years. The Corporation's banking
subsidiary does not believe it is in the best interest of the Corporation to
offer today's low rates for extended terms. The negative impact to the banking
subsidiary's net interest margin in subsequent years for the purpose of growing
the balance sheet is not within the asset/liability strategy currently employed
by management.
The Corporation has provided for loan losses at the same level for the past
several years. However, the reserve for loan losses has increased
proportionately with loan growth, due to the fact that charge-offs of
non-performing loans continue to be at or below expected levels.
The Corporation's fixed assets have decreased $162,821 resulting from normal
depreciation. There have been no significant fixed asset additions during this
six month period in 2003.
Total deposits for the Corporation have decreased $14.0 million (2.6%) during
the first six months of 2003. The decline in deposits is the result of a normal
downward adjustment from seasonally high year-end municipal, commercial and
retail holiday deposits at the Corporation's subsidiary bank. The Corporation
continues to remain competitive in a very unstable economic climate, offering
rates in the upper quartile of those offered by its competition. Management
believes that the Corporation's strength lies in its reputation and business
practices which have instilled confidence among its long term customers.
LIQUIDITY
The ability to provide the necessary funds for the day-to-day operations of the
Corporation depends upon a sound liquidity position. Management has continued to
monitor the Corporation's liquidity position by reviewing the maturity
distribution between interest earning assets and interest bearing liabilities.
Fluctuations in interest rates can be the primary cause for the flow of funds
into or out of a financial institution.
The corporation continues to offer deposit products that it believes are
competitive and will encourage depositors to leave their funds in the
Corporation's banking subsidiary. Management believes that their efforts will
help the Corporation to both retain existing deposits as well as encourage
deposit growth. With low performance in the stock market for the past several
years, deposits have flowed into the banking industry. Loan growth has been
minimal in the first two quarters of 2003 resulting in liquidity at the banking
subsidiary level, with $9.7 million in Federal Funds sold and a liquid and
marketable investment portfolio.
Additional sources of liquidity are available as of June 30, 2003 through the
banking subsidiary's unused $30 million Federal Funds purchased facility and up
to $41 million available under reverse repurchase agreements through its
correspondent banking relationship.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2003 and 2002
The after tax net income of the Corporation has increased $2.0 million
(402.6%) to $2.5 million during the second quarter of 2003 compared to the same
period in 2002. This increase reflects the settlement of a second litigation
with Creve Coeur Corporation in the second quarter of 2002, resulting in a
negative after tax effect for last year of approximately $1.8 million, or $0.70
per share. Operating income, excluding the extraordinary settlement item,
increased $506,000 (16.9%) for the same period primarily due to fees associated
with mortgage origination for the secondary market.
Interest income and fees on loans decreased $446,700 (6.0%) during the
second quarter of 2003 compared to the second quarter of 2002. Although loan
balances have remained relatively constant; management has been aggressively
seeking new business to replace maturing loans. Significant downward pressure on
interest rates has been noted this past year due to scheduled as well as
unscheduled pricing demands by loan customers during this period of low interest
rates. Current yield on loans is 6.43%, down from 6.73% at year-end. Despite
this significant decrease, the banking subsidiary's year to date net interest
income (tax equivalent) as a percentage of average earning assets is 5.16%. This
net margin ranks in the upper quartile of the banking subsidiary's peer group as
reported in the most recent Uniform Bank Performance Report prepared by the
Federal Financial Institutions Examination Council.
Interest income on investment securities decreased $93,900 (5.7%) during
the second quarter of 2003 compared to the second quarter of 2002. Portfolio
outstandings have increased $5.8 million since year-end and approximately $28 .4
million during the past year. The growth in the portfolio has not offset the
loss of income associated with the decline in rates of portfolio assets. The
current tax equivalent yield of the portfolio of 5.95% is down significantly
from the tax equivalent yield one year ago of 6.83%. Although the yield has
declined significantly, management is trying to maintain a positive balance
between interest earning assets and interest bearing liabilities. Management
continually watches for suitable investments that will earn an acceptable yield
while allowing the Corporation to provide for cash fluctuations. Interest income
on Federal Funds sold decreased $27,541 reflecting management's commitment to
maximizing earnings through effective deployment of bank assets.
Interest expense on deposits has decreased $717,400 (35.7%) in the three
months ended June 30, 2003 compared to the same period in 2002. Although
deposits have declined during the first two quarters of 2003 their overall level
is relatively constant with the same period last year. Rates have declined to
historical lows with yet another reduction in short term rates by the Federal
Reserve Bank in June 2003. The Corporation's subsidiary pays competitive rates,
yielding 0.98% on average for the three months ended June 30, 2003 compared to
1.65% for the same period in 2002.
Other income has increased $528,607 (27.5%) during the second quarter of
2003 compared to the second quarter of 2002, principally resulting from the
secondary mortgage lending market. Other expenses have decreased $2,627,577
(30.1%) during the same period. The decrease primarily resulted from the
settlement of the second of two litigations in the second quarter of 2002 in the
amount of $2.8 million before tax. This settlement had a negative after tax
effect of $1.8 million during the second quarter of 2002.
A summarized change in income for the quarters appears below:
Three Months Ended June 30, June 30,
2003 2002 Increase
(UNAUDITED) (Decrease)
Revenue and Expenses: (000's)
Interest Income $ 8,553 $ 9,121 $ (568)
Less: Interest Expense 1,298 2,016 718
-------- -------- --------
Net Interest Income 7,255 7,105 150
Less: Provision for Loan Loss 105 105 --
Other Operating Expense
Net of Other Operating
Revenues 3,654 4,010 (356)
-------- -------- --------
Income from Operations 3,496 2,990 506
One Time Litigation Settlement 0 2,800 (2,800)
-------- -------- --------
Income Before Income Taxes 3,496 190 3,306
Tax Provision 1,035 (300) 1,335
-------- -------- --------
NET INCOME $ 2,461 $ 490 $ 1,971
======== ======== ========
Six Months Ended June 30, 2003 and 2002
Net income for the first six months of 2003 increased $3.0 million
(158.0%), compared to the first six months of 2002.
The increase is primarily the result of the settlement of two litigations
during the first two quarters of 2002. This settlement resulted in a negative
after tax charge in the first two quarters of 2002 of approximately $2.6
million, or $1.50 per share. Operating income, excluding the extraordinary
settlement items, increased $813,000 (13.7%) for the same period primarily
resulting from fees associated with mortgage origination for the secondary
market.
Interest income and fees on loans decreased $967,400 (6.5%) in the first
half of 2003 compared to the first six months of 2002. Loan balances have
remained constant, however significant downward pressure on interest rates has
been noted this past year. Management is optimistic that new loan production for
the remainder of the year will outpace loan run-off. The decline in economic
conditions has reduced demand for loans, and forced lower rates. New loans,
replacing maturing loans as well as scheduled repricing anniversaries and
portfolio borrowers seeking rate concessions, have brought our rates down to
6.43% from 7.33% at June 30. 2002. Management believes that the current lack of
demand for loans will continue and that rates will remain low through the
remainder of 2003.
Interest income on investment securities decreased $179,159 in the first
six months of 2003 compared to the same period in 2002. Although balances in
investment securities have increased significantly, the average yield attained
has dropped.
Interest expense on deposits has decreased $1.5 million (35.2%) during the
first six months of 2003 compared to the first six months of 2002. Although
deposit balances have increased only slightly compared to June 30, 2002 , a
significant decline in interest rates paid for these deposits has enabled the
Corporation's subsidiary bank to maintain a strong net interest margin compared
to its peer group of banks. The lower average rates paid on deposits has helped
to support overall net income from operations. Net Interest Margin decreased
from 5.18% as of June 30, 2002 to 4.86% as of June 30, 2003.
Short-term borrowings interest expense has decreased $40,783 (69.3%)
compared to the same period in 2002. Lower average balances in 2003 primarily
account for this change.
Other income increased $701,709 (17.5%) during the first six months of 2003
compared to the first six months of 2002. As stated above, this increase is
principally associated with the gain on sale of loans into the secondary market.
Other expenses decreased $3,996,224. The decrease is primarily the result
of the settlement of two litigations in the first two quarters of 2002, totaling
$4,250,000 before tax.
CAPITAL ADEQUACY
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 risk-based capital ratio of 8.0%, of which 4.0% must be comprised of
Tier 1 capital.
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 3.0%
Tier 1 capital to total assets, while lower rated banking organizations must
maintain a ratio of at least 4.0% to 5.0%.
The risk-based capital ratio for the Corporation is 21.13% and its leverage
ratio is 13.63%.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation's Annual Report on Form 10-K for the year ended December
31, 2002 contains certain disclosures about market risks affecting the
Corporation. There have been no material changes to the information provided
which would require additional disclosures as of the date of this filing.
ITEM 4.
CONTROLS AND PROCEDURES
The Registrant maintains a set of disclosure controls and procedures that
are designed to ensure that information required to be disclosed by it in the
reports filed by it under the Securities Exchange Act of 1934, as amended, is
recorded and processed, summarized and reported within the time periods
specified in the SEC's rules and forms. Within the 90 days prior to the date of
this report, the Registrant carried out an evaluation, under the supervision and
with the participation of management, including the Chief Executive Officer and
President who is also the Chief Financial Officer of the Registrant, of the
effectiveness of the design and operation of the Registrant's disclosure
controls and procedures pursuant to Rule 13a -14 of the Exchange Act. Based on
that evaluation, the Chief Executive Officer and President who is also the Chief
Financial Officer of the Registrant concluded that the Registrant's disclosure
controls and procedures are effective.
There have been no significant changes in the Registrant's internal
controls or other factors that could significantly affect those controls
subsequent to the conclusion of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 4 Submission of Matters to a Vote of Security Holders
On June 11, 2003, Tri City Bankshares Corporation held its annual
shareholders' meeting. The only item held for a vote of shareholders was for the
election of Directors for the ensuing year. The number of shares of common stock
represented by proxy and in person was 6,913,781 which represented approximately
84.9% of the total outstanding shares entitled to vote for directors. There was
no solicitation in opposition to management's nominees for directors and all
such nominees were elected pursuant to the following vote:
Director's Name: Frank Bauer
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: William Beres
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: Sanford Fedderly
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: William Gravitter
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: Henry Karbiner, Jr.
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: William L. Komisar
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: Christ Krantz
For 6,898,564
Against 0
Withheld 15,217
Abstain 0
Broker Non-Vote 0
Director's Name: Robert Orth
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: Ronald K. Puetz
For 6,898,564
Against 0
Withheld 15,217
Abstain 0
Broker Non-Vote 0
Director's Name: David Ulrich, Jr.
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: William Werry
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
Director's Name: Scott A. Wilson
For 6,899,866
Against 0
Withheld 13,915
Abstain 0
Broker Non-Vote 0
Director's Name: Agatha T. Ulrich
For 6,899,926
Against 0
Withheld 13,855
Abstain 0
Broker Non-Vote 0
No other matters were voted on at the annual meeting.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certification of Mr. Karbiner.
(b) Reports on Form 8-K
The Corporation furnished one Form 8-K during the quarter covered
by this report as follows:
(1) Form 8-K dated April 18, 2003 under Item 7 and 9 regarding
unaudited Financial Information and related management
discussion mailed to shareholders.
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.
TRI CITY BANKSHARES CORPORATION
(REGISTRANT)
DATE: August 5, 2003 /s/Henry Karbiner, Jr.
--------------------- ---------------------------------------
Henry Karbiner, Jr.
President, Chief Executive Officer,
and Treasurer
(Principal Executive Officer)
DATE: August 5, 2003 /s/Thomas W. Vierthaler
--------------------- ---------------------------------------
Thomas W. Vierthaler
Vice President and Comptroller
(Chief Accounting Officer)
INDEX TO EXHIBITS
Exhibit 31
Rule 13a -14(a) Certification
Exhibit 32
Section 1350 Certification