Search the web
Welcome, Guest
[Sign Out, My Account]

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
FFKT > SEC Filings for FFKT > Form 10-Q on 8-May-2014All Recent SEC Filings

Show all filings for FARMERS CAPITAL BANK CORP



Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


This report contains forward-looking statements with the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Statements in this report that are not statements of historical fact are forward-looking statements. In general, forward-looking statements relate to a discussion of future financial results or projections, future economic performance, future operational plans and objectives, and statements regarding the underlying assumptions of such statements. Although management of Farmers Capital Bank Corporation (the "Company" or "Parent Company") believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate.

Various risks and uncertainties may cause actual results to differ materially from those indicated by the Company's forward-looking statements. In addition to the risks described under Part 1, Item 1A "Risk Factors" in the Company's most recent annual report on Form 10-K, factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to: economic conditions (both generally and more specifically in the markets in which the Company and its subsidiaries operate) and lower interest margins; competition for the Company's customers from other providers of financial services; deposit outflows or reduced demand for financial services and loan products; government legislation, regulation, and changes in monetary and fiscal policies (which changes from time to time and over which the Company has no control); changes in interest rates; changes in prepayment speeds of loans or investment securities; inflation; material unforeseen changes in the liquidity, results of operations, or financial condition of the Company's customers; changes in the level of non-performing assets and charge-offs; changes in the number of common shares outstanding; the capability of the Company to successfully enter into a definitive agreement for and close anticipated transactions; unexpected claims or litigation against the Company; technological or operational difficulties; the impact of new accounting pronouncements and changes in policies and practices that may be adopted by regulatory agencies; acts of war or terrorism; the ability of the parent company to receive dividends from its subsidiaries; the impact of larger or similar financial institutions encountering difficulties, which may adversely affect the banking industry or the Company; the Company or its subsidiary banks' ability to maintain required capital levels and adequate funding sources and liquidity; and other risks or uncertainties detailed in the Company's filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company.

The Company's forward-looking statements are based on information available at the time such statements are made. The Company expressly disclaims any intent or obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events, or other changes.


First Quarter 2014 Compared to First Quarter 2013

The Company reported net income of $3.4 million for the quarter ended March 31, 2014, a decrease of $422 thousand or 11.1% compared to net income of $3.8 million for the first quarter of 2013. On a per common share basis, net income was $.38 and $.44 for the current and year-ago quarters, respectively. This represents a decrease of $.06 or 13.6%. Selected income statement amounts and related data are summarized in the table below.

(In thousands except per share data)                                               Increase
Three Months Ended March 31,                           2014           2013       (Decrease)
Interest income                                  $   16,374     $   16,742     $       (368 )
Interest expense                                      2,695          3,166             (471 )
Net interest income                                  13,679         13,576              103
Provision for loan losses                               132           (632 )            764
Net interest income after provision for loan
losses                                               13,547         14,208             (661 )
Noninterest income                                    5,373          5,411              (38 )
Noninterest expenses                                 14,430         14,509              (79 )
Income before income tax expense                      4,490          5,110             (620 )
Income tax expense                                    1,120          1,318             (198 )
Net income                                       $    3,370     $    3,792     $       (422 )
Less preferred stock dividends and discount
accretion                                               537            485               52
Net income available to common shareholders      $    2,833     $    3,307     $       (474 )

Basic and diluted net income per common share    $      .38     $      .44     $       (.06 )

Weighted average common shares outstanding -
basic and diluted                                     7,479          7,470                9
Return on average assets                                .75 %          .86 %        (11) bp
Return on average equity                               7.77 %         9.10 %       (133) bp
bp = basis points.

The $422 thousand decrease in net income for the current quarter compared to the first quarter a year earlier was driven mainly by a higher provision for loan losses of $764 thousand or 121%, partially offset by an increase in net interest income of $103 thousand or 0.8% and lower income tax expense of $198 thousand or 15.0%. Further information related to the more significant components making up the increase in net income follows.

Net Interest Income

The overall interest rate environment at March 31, 2014, as measured by the Treasury yield curve, remains at very low levels when compared with historical trends. Since year-end 2013, yields on three and six-month maturities were relatively unchanged, decreasing four and three basis points, respectively. The yield on the three-year notes increased 10 basis points, while longer-term maturities declined 31 and 41 basis points for the ten and thirty-year maturity periods, respectively. At March 31, 2014, the short-term federal funds target interest rate remained between zero and 0.25%, unchanged since December 2008. The Federal Reserve Board has indicated that the low federal funds rate will likely be appropriate for a considerable period of time, particularly in light of current inflation projections and its longer-run goal of supporting maximum employment. At March 31, 2014, the national and Kentucky unemployment rate was 6.7% and 7.9%, respectively.

Net interest income was $13.7 million for the first three months of 2014, an increase of $103 thousand or 0.8% compared to $13.6 million for the first three months of 2013. The improvement in net interest income was driven by lower interest expense of $471 thousand or 14.9%, which offset a decrease in interest income of $368 thousand or 2.2%. Interest expense on deposits and interest income on loans decreased $460 thousand or 27.7% and $889 thousand or 6.6%, respectively; interest on investment securities increased $528 thousand or 16.6%.

The decrease to interest income and interest expense was driven mainly by overall rate declines on loans and time deposits. Rate declines are the result of an overall slow growing economy, related competitive pressures, and the Company's strategy of being more selective in pricing its loans and deposits in an effort to improve credit quality, net interest income, overall profitability, and capital position.

The Company is generally earning and paying less interest from its earning assets and funding sources as the average rates earned and paid have decreased. This includes repricing of variable and floating rate assets and liabilities that have reset to overall lower amounts since their previous repricing date as well as activity related to new earning assets and funding sources in a low interest rate environment. The Company continues to reprice its higher-rate maturing time deposits downward to lower market rates or allow them to mature without renewal, as liquidity has been adequate.

Average investment securities increased $43.3 million or 7.5% from a year ago mainly due to a decline in loans outstanding. In periods when quality loan demand is low, available funds are invested in lower yielding investment securities or cash equivalents or otherwise used to manage liquidity, such as for deposit outflows or for the repayment of long-term debt.

The net interest margin on a taxable equivalent basis decreased three basis points to 3.41% for the first quarter of 2014 compared to 3.44% for the same quarter of 2013. The decrease in net interest margin reflects a two basis point decrease in the spread between the average rate earned on earning assets and the average rate paid on interest bearing liabilities to 3.25% from 3.27%. The Company expects its net interest margin to remain relatively flat in the near term according to internal modeling using expectations about future market interest rates, the maturity structure of the Company's earning assets and liabilities, and other factors. Future results could be significantly different than expectations.

The following tables present an analysis of net interest income for the quarterly periods ended March 31.

Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and

  Add FFKT to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for FFKT - All Recent SEC Filings
Copyright © 2015 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.