ITEM 1. BUSINESS
Castle BancGroup, Inc. (Company) is a registered bank holding company organized in 1984 under Delaware law. The operations of the Company and its subsidiaries consist primarily of those financial activities common to the commercial financial services industry, including trust, data processing, mortgage banking, and consumer finance services. Unless the context otherwise requires, the term "Company" as used herein includes the Company and its subsidiaries on a consolidated basis. Substantially all of the operating income of the Company is attributable to its subsidiaries.
The primary function of the Company is to coordinate the policies and operations of its subsidiaries in order to improve and expand their products and services and to effect operating economies of scale. The Company provides auditing, marketing, and data processing services to the subsidiaries on a market value driven fee basis. Management services, training, human resource and business development assistance is also provided by the Company at no charge to the subsidiaries.
The Company is also responsible for the identification and evaluation of potential financial industry acquisition targets within the strategic market area, defined as the corrider bounded by Chicago's western suburbs on the east, Interstate 39 on the west, Southern Wisconsin on the north, and northwestern Indiana on the southeast. On May 24, 1995, the Company, through its subsidiary Castle Mortgage, Inc., completed the acquisition of substantially all the assets and assumed substantially all the liabilities of Premier Home Financing, Inc. (Premier), a residential mortgage loan originator and broker.
Sandwich State Bank (SSB), First National Bank in DeKalb (FNB), First State Bank of Harvard (FSB) and The Bank of Yorkville (BOY) (collectively, Subsidiary Banks) are 100% owned banking subsidiaries of the Company. The Subsidiary Banks provide banking services common to the industry, including but not limited to, demand, savings and time deposits, loans, cash management, electronic banking services, trust services and credit and debit cards. The Subsidiary Banks serve a diverse customer base including individuals, businesses, governmental units, and institutional customers. The Subsidiary Banks have banking offices in DeKalb, Sycamore, Sandwich, Harvard and Yorkville, Illinois and mortgage loan origination offices in Rockford, Sandwich, and Sugar Grove, Illinois.
Castle Finance Company, Inc. (CFC), an Illinois corporation, is a 100% owned consumer finance company that engages in making small consumer loans, as well as acting as an agent to sell insurance relating to those loans. CFC is a headquartered in DeKalb, with loan origination offices in DeKalb, Plano, LaSalle, Dixon, Rockford, Morris, and Harvard, Illinois.
Castle Mortgage, Inc. (CMI), an Illinois corporation is a residental mortgage originator and broker that engages in the origination of residental mortgages which are then sold into the secondary market. CMI is headquartered in Oak Brook, Illinois and has loan origination offices Oak Brook, Rolling Meadows, Chicago, and Naperville, Illinois and Merrillville, Indiana. CMI also provides processing services and delivery into the secondary market for residental mortgage loans orginated by the Subsidiary Banks.
COMPETITION
Active competition exists in all principal areas where the Company and its subsidiaries operate, not only with other commercial banks, finance companies and mortgage bankers, but also with savings and loan associations, credit unions and other financial service companies serving the Company's defined market area. The principal methods of competition between the Company and its competitors are price and service. Price competition, primarily in the form of interest rate competition, is a standard practice within the Company's market place as well as the financial industry. Service and product quality are also significant factors in competing and allow for differentiation from competitors.
Deposits in Subsidiary Banks are well balanced, with a large customer base and no dominant segment of accounts. Each Subsidiary Bank's loan portfolio is also characterized by a large customer base, including loans to commercial, agricultural and consumer customers, with no dominant relationships. There is no readily available source of information that delineates the market for financial services offered by non-bank competitors in the Company's market.
REGULATION AND SUPERVISION
Bank holding companies and banks are extensively regulated under both federal and state law. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutes and regulations. Any significant change in applicable law or regulation may have an effect on the business and prospects of the Company and its subsidiaries.
The Company is registered under and is subject to the provisions of the Bank Holding Company Act of 1956, as amended, and is regulated by the Board of Governors of the Federal Reserve System (Federal Reserve Board). Under the Bank Holding Company Act, the Company is required to file annual reports and such additional information as the Federal Reserve Board may require and is subject to examination by the Federal Reserve Board. The Federal Reserve Board has jurisdiction to regulate virtually all aspects of the Company's business. See "The Company's Subsidiaries" section of this Report for discussion of regulators of the Subsidiaries.
The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve Board before merging with or consolidating into another bank holding company, acquiring substantially all the assets of any bank or acquiring directly or indirectly any ownership or control of more than 5% of the voting shares of any bank.
The Bank Holding Company Act also prohibits a bank holding company, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank and from engaging in any business other than that of banking, managing and controlling banks, or furnishing services to banks and their subsidiaries. The Company, however, may engage in certain businesses determined by the Federal Reserve Board to be so closely related to banking or managing and controlling banks as to be a proper incident thereto. The Bank Holding Company Act does not place territorial restrictions on the activities of bank holding companies or their nonbank subsidiaries.
Deposits of all the Subsidiary Banks are insured by the Federal Deposit Insurance Corporation (FDIC) under the Bank Insurance Fund (BIF). The FDIC also maintains another insurance fund, the Savings Association Insurance Fund (SAIF), which primarily insures savings association deposits. Applicable law requires the the SAIF and BIF funds each achieve and maintain a ratio of insurance reserves to total deposits equal to 1.25%. The BIF reached this level in 1995, and the FDIC announced a reduction in BIF premiums for most banks. Based on this reduction, the highest rated institutions (approximately 92% of the nearly 11,000 BIF-insured banks) paid the statutory minimum of $2,000 for FDIC insurance in 1996. Rates for all institutions were reduced by $.04 per $100 of deposits, leaving a premium range of $.00 (the statutory minimum applies) to $.27 per $100 of deposits instead of the previous $.04 to $.31 per $100. The Subsidiary Banks, for deposit insurance assessment purposes, are all classified in the highest category and all paid the statutory minimum of $2,000 for FDIC insurance in 1996. The lower assessment rates resulted in FDIC premiums paid in 1996 of $8,000, substantially less than the $470,958 (adjusted for rebate by FDIC) and $804,161 assessments that the Subsidiary Banks paid in 1995 and 1994, respectively. Effective January 1, 1997, all FDIC insured depository institutions will pay approximately $.013 per $100 pf BIF- Assessable deposits.
The FDIC and other bank regulators have adopted supervisory reforms which link mandatory supervisory action termed "prompt regulatory action" to the bank's capital levels. In addition to the three categories used for assessment determination above, the regulators have added two categories, significantly undercapitalized and critically undercapitalized. Bank regulators will apply increasingly stringent regulatory sanctions and restrictions on banks that fall in the lower three capital categories. These sanctions range from requirements for filing and operating under a capital plan to restrictions on asset growth and interest rates paid to appointment of a receiver or a conservator for the institution as a bank's capital decreases.
Since September 29, 1995, adequately capitalized and adequately managed bank holding companies have been able to acquire banks across state lines, without regard to whether the transaction is prohibited by state law; however, they are required to maintain the acquired institutions as separately chartered institutions. Any state law relating to the minimum age of target banks (not to exceed five years) is applicable. The Federal Reserve Board is not permitted to approve any acquisition if, after the acquisition, the bank holding company would control more than 10% of the deposits of insured depository institutions nationwide or 30% or more of the deposits in the state where the target bank is located. The Federal Reserve Board could approve an acquisition, notwithstanding the 30% limit, if the state waives the limit either by statute, regulation or order of the appropriate state official.
In addition, beginning June 1, 1997, banks will be permitted to merge with one another across state lines and thereby create a main bank with branches in separate states. After establishing branches in a state through an interstate merger transaction, the bank could establish and acquire additional branches at any location in the state where any bank involved in the merger could have established or acquired branches under applicable federal or state law.
States may adopt legislation permitting interstate mergers before June 1, 1997. In contrast, states may adopt legislation before June 1, 1997, subject to certain conditions, opting-out of interstate branching. If a state opts-out of interstate branching, no out-of-state bank may establish a branch in that state through an acquisition or de novo, and a bank whose home state opts-out may not participate in an interstate merger transaction.
Illinois has adopted legislation permitting interstate mergers beginning June 1, 1997. The Company is currently permitted to acquire banks located in any state outside Illinois and any organization located outside Illinois is permitted to acquire the Company. These provisions should not materially affect the Company because the Company does not have any current plans to acquire institutions located outside Illinois and because Illinois law, for several years, has permitted institutions located in any state of the United States to acquire banks or bank holding companies within Illinois subject to the ability of Illinois institutions to acquire banks and bank holding companies in such other state on similiar conditions as Illinois law. The fact that Illinois has decided to permit interstate branching beginning June 1, 1997, means that if the
Company did acquire an institution outside Illinois, the Company could, if it deemed it appropriate, convert such institution's offices into branches of any of the Subsidiary Banks or any other banking subsidiary then in existence. The Company, however, does not have any current plans to acquire any banking organization outside the state of Illinois.
National banking regulations restrict the amount of dividends that a bank may pay to its stockholders. Generally, the regulations provide that dividends are limited to net earnings for the current and two preceding years, reduced by dividends paid and transfers to permanent capital. At December 31, 1996, subject to minimum regulatory capital guidelines, First National Bank in DeKalb could, without prior approval of regulatory authorities, declare dividends of approximately $1,452,000.
The Sandwich State Bank, First State Bank of Harvard, and The Bank of Yorkville are subject to state banking regulations which provide that dividends can be paid up to the amount of available undivided profits (as defined), subject to total capital adequacy considerations.
THE COMPANY'S SUBSIDIARIES
SSB, FSB and BOY are state chartered banks. They are therefore subject to regulation and examination by the Illinois Office of Banks and Real Estate. FSB has obtained all regulatory approvals to convert to a nationally chartered bank effective April 1, 1997. FNB is a nationally chartered bank and Federal Reserve member, and is therefore subject to regulation and examination by the Office of the Comptroller of the Currency as well as the Federal Reserve Board. All Subsidiary Banks are also members of the Federal Deposit Insurance Corporation and as such are subject to the provisions of the Federal Deposit Insurance Act and examination by the Federal Deposit Insurance Corporation. The examinations by the various regulatory authorities are designed for the protection of bank depositors.
The federal and state laws and regulations generally applicable to banks regulate, among other things, the scope of their business, their investments, their reserve against deposits, the nature and amount of and collateral for loans, and the location of banking offices and types of activities which may be performed at such offices.
Subsidiary banks of a bank holding company are subject to certain restrictions under the Federal Reserve Act and the Federal Deposit Insurance Act on loans and extension of credit to the bank holding company or to its other subsidiaries, investments in the stock or other securities of the bank holding company or its other subsidiaries, or advances to any borrower collateralized by such stock or other securities.
The Subsidiary Banks have unlimited statewide branching authority, without regard to any numerical or geographic limitation.
CFC is a finance company and is therefore subject to licensing, regulation and examination by the Department of Financial Institutions for the State of Illinois. Examinations by this regulator are designed for the protection of the consumer borrowers and not for the finance company shareholders.
CMI is a residental mortgage originator and broker and is therefore subject to licensing regulation and examination by the Illinois Office of Banks and Real Estate, as well as appropriate agencies in Indiana and Wisconsin. Examinations by this regulator are designed for the protection of the consumer borrowers and not for the mortgage company shareholders.
CAPITAL REQUIREMENTS
All federal bank regulatory agencies have adopted risk-based capital guidelines. These guidelines establish required levels of capital that are monitored by certain ratios. Capital is divided into two components; Tier 1 capital which includes common stock, additional paid-in capital, retained earnings and certain types of perpetual preferred stock less goodwill, and Tier 2 capital that includes among other things, limited life preferred stock, subordinated debt and the allowance for
loan losses. These components of capital are compared to both total assets as reported on the balance sheet and assets that have been adjusted to compensate for associated risk to the organization. This allocation separates assets and specified off-balance sheet commitments into four categories that are risk-weighted from 0 percent to 100 percent according to predefined levels of average risk. The guidelines require a tangible leverage capital ratio (defined as Tier 1 capital to average assets) of 4.0%. The Company had a tangible leverage capital ratio of 6.39% as of December 31, 1996. The guidelines require a total capital ratio (defined as the total of both Tier 1 and Tier 2 capital to risk weighted assets) of 8.00%. The Company had a total capital to risk weighted assets ratio of 10.66% as of December 31, 1996. The guidelines also require a Tier 1 ratio (defined as Tier 1 capital to risk weighted assets) of 4.00%. The Company had a Tier 1 ratio of 9.45% as of December 31, 1996. The regulatory requirements are considered minimums and actual ratios should be commensurate with the level and nature of all risks of a company (as defined by the regulatory agencies). Regulators generally expect organizations that are experiencing internal growth or are making acquisitions to maintain capital levels substantially above the minimum supervisory levels and comparable to peer groups, without significant reliance on intangible assets. Management intends to continue its emphasis on a strong capital position.
MONETARY POLICY AND ECONOMIC CONDITIONS
The earnings of commercial banks, finance companies, mortgage bankers and bank holding companies are affected not only by general economic conditions, but also by the policies of various governmental regulatory authorities. In particular, the Federal Reserve Board influences conditions in the money and capital markets, which affect interest rates and growth in bank credit and deposits. Federal Reserve Board monetary policies have had a significant effect on the operating results of commercial banks in the past and this is expected to continue in the future. The general effect, if any, of such policies on future business and earnings of the Company and its Subsidiary Banks cannot be predicted.
EMPLOYEES
As of December 31, 1996, the Company and its subsidiaries had a total of 334 full-time equivalent employees. None of these employees are subject to a collective bargaining agreement and management believes it has excellent relations with its staff.
ITEM 2.
ITEM 2. PROPERTIES
The Company operates its executive offices at 208 West Locust Street, DeKalb, Illinois. This facility is an approximately 2,000 square foot refurbished residential house owned by FNB. A temporary light commercial use zoning variance was obtained for this property and it is currently being leased to the Company by FNB at rates and terms that are standard for the area. The Company is currently in the process of remodeling a commercial building owned by FNB that is located at 121 West Lincoln Highway in DeKalb. This approximately 15,000 square foot building is leased to the company at rates and terms that are standard for the area. This facility will house all administrative, accounting, data processing, human resource and marketing functions of the Company and is anticipated for full occupancy in May 1997.
FNB operates its main office at 141 West Lincoln Highway, DeKalb, Illinois. This facility includes approximately 19,600 square feet. A drive-in facility is located at the same address with approximately 1,200 square feet of space. FNB also operates a remote drive-up banking facility
with approximately 1,800 square feet located less than 1 mile north of the main office at 1007 North First Street, DeKalb, Illinois. FNB also operates a commercial building at 121 West Lincoln Highway and leases the entire approximately 15,000 square feet to the Company for administrative, accounting, and data processing operations. FNB also owns a residental house at 208 West Locust Street, DeKalb, Illinois with approximately 2,000 square feet that is also temporarily leased to the Company for its executive offices. FNB owns all of these buildings as well as the underlying land. FNB also operates a full service branch facility with approximately 9,400 square feet located at 511 West State in Sycamore, Illinois. The Bank owns the building and approximately 60% of the underlying land and has a long-term lease with option to buy the remaining land. In addition, FNB operates an automated teller machine at a local university and leases space on a month-to-month basis.
SSB conducts its operations from its main office facility located at 100 West Church Street, Sandwich, Illinois. This facility has approximately 13,000 square feet of space. SSB owns the building as well as the underlying land. A drive-in facility is contiguous to the main office. SSB also leases two office spaces used for mortgage loan origination offices. Each of these sites are less than 1,000 square feet and are located at 44 West Church Street, Sandwich, Illinois and 91 Sugar Lane, Sugar Grove, Illinois. Both sites are rented at rates and terms that are standard in the area.
FSB operates from its main office facility at 201 West Diggins Street, Harvard, Illinois. This facility has approximately 11,000 square feet of space. FSB owns both the building and the underlying land. A drive-in facility is contiguous to the main office. FSB also operates a remote branch facility with approximately 5,400 square feet at a local shopping center located at 1265 Division Street, Harvard, Illinois. The Bank owns both the building and the underlying land. FSB also leases two office spaces used for mortgage loan origination offices. Each of these sites are less than 1,000 square feet of office space and are located at 62 North Ayer Street, Harvard, Illinois and 695 North Perryville Road, Suite 2, Rockford, Illinois. Both sites are rented at rates and terms that are standard in the area.
BOY operates from its main office facility at 606 Countryside Center, Yorkville, Illinois. The Bank utilizes 50% of the approximately 22,000 square of space. BOY leases the remaining 50% of the space to medical organizations under leases that are standard in the area as to terms and rental income. BOY owns the building and the underlying land. A drive-in facility is contiguous to the main office.
CFC operates offices in the following seven towns in northern Illinois: Plano, LaSalle, DeKalb, Dixon, Rockford, Morris and Harvard. The DeKalb office includes both CFC's executive offices as well as an operating office and is approximately 3,500 square feet of leased space with rental costs and lease terms that are standard for the area. Offices for the other six locations are less than 1,000 square feet and are leased with rental costs and lease terms that are standard for the areas.
CMI operates offices in Oak Brook, Naperville, Chicago, and Rolling Meadows in Illinois and Merrillville in Indiana. The Oak Brook office includes both executive and operating functions and is located at 1301 West 22nd Street, Suite 100, Oak Brook, Illinois which consists of approximately 6,300 square feet of leased space. The office in Rolling Meadows houses an operating function in approximately 1,400 square feet of leased space at 5105 Tollview, Suite 110, Rolling Meadows, Illinois. The Chicago office is located in a space of approximately 2,000 square feet at 2549 North Racine Avenue, Chicago, Illinois. The Merrillville office leases approximately 3,200 square feet at 101 West 79th Avenue, Merrillville, Indiana. All the leased offices have rental costs and terms that are standard for the areas. CMI owns a facility at 847 North Center
Road, Naperville, Illinois, with approximately 2,100 square feet of office space. CMI owns both the building and the underlying land.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any subsidiary is a party to, and none of their property is subject to, any material legal proceedings, other than routine litigation incidental to the business of the Company and its subsidiaries.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters, through the solicitation of proxies or otherwise, were submitted to a vote of security holders during the quarter ended December 31, 1996.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The approximate number of holders of Common Stock of the Company on December 31, 1996 was 900 holders.
Cash dividends on the above referenced common stock are paid annually. Dividends for the years ended December 31, 1996 and 1995 were $0.20 and $0.18 per share, respectively.
The amount of dividends payable by the Company on its common stock is limited by the provisions of its long-term debt agreement. Dividends are limited to 50% of the net earnings, less dividends paid, in the previous eight quarters. As of December 31, 1996, the Company was limited to $1,821,000 for dividend purposes.
The Company's stock is not traded on an established public trading market. During the period from January 1, 1995 through December 31, 1996, management of the Company believes that there were approximately 75 trades in the Company's common stock. Management of the Company does not have information with respect to the prices at which all such trades were effected but believes that the prices ranged from $12.50 to $22.50 per share on those transactions with respect to which it does have information.
On May 24, 1995, the Company issued 45,500 common shares to Premier Home Financing, Inc. (Premier). These shares were issued in conjunction with the acquisition by Castle Mortgage, Inc. of substantially all the assets and the assumption of substantially all the liabilities of Premier. This transaction was claimed exempt from registration pursuant to Section 506 of the Securities Act of 1933. Premier represented to the Company its qualifications as an accredited investor.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information contained in the section entitled "Five Year Summary of Selected Consolidated Financial Data" on page 13 of the Company's Annual Report to its stockholders for the year ended December 31, 1996, is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in the section entitled "Management Discussion and Analysis of Financial Condition & Results of Operations" on pages 14 through 20 of the Company's Annual Report to its stockholders for the year ended December 31, 1996, is incorporated herein by reference.
The following supplementary financial information of the registrant for each of the last three years (unless otherwise stated) is included on pages 11 through 17 of this Report:
Table 1 Comparison of Average Balance Sheets Table 2 Analysis of Net Interest Income - Tax Equivalent Basis Table 3 Maturing Of Investment Securities Table 4 Analysis of Loan Portfolio and Loss Experience (for Last Five Years) Table 5 Allocation of Loan Losses (for Last Five Years) Table 6 Maturity and Interest Sensitivity of Loans Table 7 Average Deposits (for Last Five Years) Table 8 Short-term Borrowings Table 9 Return on Average Equity and Average Assets (for Last Five Years)
TABLE 1 COMPARISON OF AVERAGE BALANCE SHEETS
The following table sets forth the registrant's consolidated average daily condensed balance sheet for each of the last three years (dollar figures in thousands):
** Castle BancGroup, Inc. acquired substantially all the assets and assumed substantially all the liabilities of Premier Home Financing, Inc. on May 24, 1995, in a transaction that was accounted for as a purchase. Assets, liabilities, and equity balances were included in the averages from that date forward.
TABLE 2 ANALYSIS OF NET INTEREST INCOME - TAX EQUIVALENT BASIS (IN THOUSANDS)
THE TABLE BELOW SHOWS THE CHANGES IN INTEREST INCOME (TAX EQUIVALENT) AND INTEREST EXPENSE ATTRIBUTABLE TO VOLUME AND RATE VARIANCES. THE CHANGE IN INTEREST INCOME (TAX EQUIVALENT) DUE TO BOTH VOLUME AND RATE HAS BEEN ALLOCATED TO VOLUME AND RATE CHANGES IN PROPORTION TO THE RELATIONSHIP OF THE ABSOLUTE DOLLAR AMOUNTS OF THE CHANGE IN EACH.
(1) Castle BancGroup, Inc. acquired substantially all the assets and assumed substantially all the liabilities of Premier Home Financing, Inc. on May 24, 1995 in a transaction that was accounted for as a purchase. Assets, liabilities and equity balances were included in the averages from that date forward. (2) The interest on tax-exempt investment securities and tax-exempt loans is calculated on a tax equivalent basis assuming a blended federal and state tax rate of 38.75% in 1996 and 34% in 1995 and 1994. (3) The yield-related fees recognized from the origination of mortgage loans held for sale are in addition to the interest earned on the loans during the period in which they are warehoused for sale as shown above. (4) The balances of nonaccrual loans are included in average loans oustanding. Interest on loans includes yield-related loan fees.
TABLE 3 MATURITY OF INVESTMENT SECURITIES
The following table sets forth the maturity of the registrants investment portfolio.
- - ------------------------------------ 1 Yields were calculated on a tax equivalent basis assuming a blended federal and state tax rate of 38.75%.
2 At December 31, 1996, the Company did not own any investment securities from a single issuer, other than the U.S. Federal Government, that was greater than 10% of total equity capital.
3 Mortgage-backed security maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without any penalties. Therefore, these securities are not included within the maturity categories above.
TABLE 4 ANALYSIS OF LOAN PORTFOLIO AND LOSS EXPERIENCE (IN THOUSANDS)
THE FOLLOWING TABLE SETS FORTH THE REGISTRANT'S LOAN PORTFOLIO BY MAJOR CATEGORY FOR EACH OF THE LAST FIVE YEARS.
TABLE 5 ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
THE FOLLOWING TABLE SHOWS THE REGISTRANT'S ALLOWANCE FOR LOAN LOSSES FOR THE LAST FIVE YEARS.
TABLE 6 MATURITY AND INTEREST SENSITIVITY OF LOANS (IN THOUSANDS)
THE FOLLOWING TABLE SHOWS THE MATURITY OF THE REGISTRANT'S LOAN PORTFOLIO.
TABLE 7 AVERAGE DEPOSITS (IN THOUSANDS)
THE FOLLOWING TABLE SETS FORTH THE REGISTRANT'S AVERAGE DAILY DEPOSITS AND AVERAGE RATE PAID ON THE INTEREST BEARING DEPOSITS FOR EACH OF THE LAST FIVE YEARS:
THE FOLLOWING TABLE SETS FORTH THE REGISTRANT'S MATURITY DISTRIBUTION FOR ALL TIME DEPOSITS OF $100,000 OR MORE AS OF DECEMBER 31, 1996.
MATURITY DISTRIBUTION FOR ALL TIME DEPOSITS OF $100,000 OR MORE (IN THOUSANDS)
TABLE 8 SHORT-TERM BORROWINGS (DOLLAR FIGURES IN THOUSANDS)
THE FOLLOWING TABLE SETS FORTH A SUMMARY OF THE REGISTRANT'S SHORT-TERM BORROWINGS FOR EACH OF THE LAST THREE YEARS.
TABLE 9 RETURN ON EQUITY AND ASSETS
THE FOLLOWING TABLE SETS FORTH THE REGISTRANT'S RETURN ON AVERAGE ASSETS, RETURN ON AVERAGE EQUITY, DIVIDEND PAYOUT RATIO, AND AVERAGE EQUITY TO AVERAGE ASSET RATIO FOR THE LAST FIVE YEARS:
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes on pages 21 through 41 of the Company's Annual Report to its stockholders for the year ended December 31, 1996, are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10:
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding directors and executive officers of the Company is included in the Company's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held April 23, 1997 (Proxy Statement) under the captions "Proposal No. 1 - Election of Directors" (page 2) and "Section 16(a) Beneficial Ownership Reporting Compliance" (page 20) which information is incorporated herein by reference.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION
The information contained under the captions "Directors' Compensation," "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation" in the Proxy Statement is incorporated herein by reference.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement is incorporated herein by reference.
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the caption "Transactions with Management" in the Proxy Statement is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. The following documents are filed as part of this report:
A. The Consolidated Financial Statements of the Company which are incorporated by reference in Item 8 from the Annual Report of the Company to its stockholders for the year ended December 31, 1996, as follows:
1. Consolidated Balance Sheets, December 31, 1996 and 1995 on page 21. 2. Consolidated Statements of Earnings, for the three years ended December 31, 1996 on page 22. 3. Consolidated Statements of Changes in Stockholders' Equity for the three years ended December 31, 1996 on page 23. 4. Consolidated Statements of Cash Flows for the three years ended December 31, 1996 on pages 24 through 25. 5. Notes to Consolidated Financial Statements on pages 26 through 40. 6. Independent Auditors' Report on page 41.
B. Financial Statement Schedules as follows:
Schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission have been omitted because they are not required under the related instructions or the required information is set forth in the financial statements and related notes.
C. Exhibits as follows:
3.1 Articles of incorporation of registrant as amended are incorporated herein by reference to Exhibit 3.1 on Form 10-K for the year ended December 31, 1993.
3.2 By-laws of the registrant as amended are incorporated herein by reference to Exhibit 3.2 on Form 10-K for the year ended December 31, 1995.
4.1 Certificate of Designation by the Board of Directors establishing Series A Perpetual Preferred Stock dated July 9, 1990 is incorporated herein by reference to exhibit 4.1 on Form 10-K for the year ended December 31, 1990.
4.2 Certificate of Designation by the Board of Directors establishing 2,600 shares of Perpetual Preferred Stock dated November 15, 1993 is incorporated herein by reference to exhibit 4.1 on Form 10-K for the year ended December 31, 1993.
10.1 Castle BancGroup, Inc. Stock Benefit Plan is incorporated herein by reference to Exhibit 4.1 of Registrant's Form S-8, Registration Statement, filed on December 22, 1994, Registration No. 33-87658.
13.1 Registrant's Annual Report to Shareholders for the Year ended December 31, 1996. The Annual Report, except for portions expressly incorporated by reference, is furnished for the information of the Commission only and is not deemed to be filed as a part of this filing.
21.1 Subsidiaries of Registrant.
23.1 Consent of KPMG Peat Marwick on Form S-8 Filing dated June 15, 1992 for the Castle BancGroup, Inc. Employee Stock Purchase Plan and on Form S-8 Filing dated December 22, 1994 for the Castle BancGroup, Inc. Employee Stock Benefit Plan.
27 Financial Data Schedule
2. Reports on Form 8-K
The registrant has not filed any reports on Form 8-K for the quarter ended December 31, 1996.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - - ------- ------------- 3.1 Articles of incorporation of registrant as amended are incorporated herein by reference to Exhibit 3.1 on Form 10-K for the year ended December 31, 1993.
3.2 By-laws of the registrant as amended are incorporated herein by reference to Exhibit 3.2 on Form 10-K for the year ended December 31, 1995.
4.1 Certificate of Designation by the Board of Directors establishing Series A Perpetual Preferred Stock dated July 9, 1990, is incorporated herein by reference to Exhibit 4.1 on Form 10-K for the year ended December 31, 1990.
4.2 Certificate of Designation by the Board of Directors establishing 2,600 shares of Perpetual Preferred Stock dated November 15, 1993 is incorporated herein by reference to Exhibit 4.1 on Form 10-K for the year ended December 31, 1993.
10.1 Castle BancGroup, Inc. Stock Benefit Plan is incorporated here by reference to Exhibit 4.1 of Registrant's Form S-8, Registration Statement, filed on December 22, 1994, Registration No. 33-87658.
13.1 Registrant's Annual Report to Shareholders for the Year Ended December 31, 1996. The Annual Report, except for portions expressly incorporated herein by reference, is furnished for the information of the Commission only and is not deemed to be filed as a part of this filing.
21.1 Subsidiaries of Registrant.
23.1 Consent of KPMG Peat Marwick on Form S-8 Filing Dated June 15, 1992 for the Castle BancGroup, Inc. Employee Stock Purchase Plan and on Form S-8 Filing Dated December 22, 1994 for the Castle BancGroup, Inc. Employee Stock Benefit Plan.
27.1 Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
Castle BancGroup, Inc.
- - ------------------------------- John W. Castle, Chairman of the Board, Chief Executive Officer and Director
Date: --------------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed by following the persons on behalf of the registrant and in the capacities and on the dates indicated.
- - ---------------------------------- ------------------------------ By: Larry D. Beaty, Executive Vice By: James N. McInnes,
President, Treasurer, Chief President, Chief Operating Financial Officer and Director Officer and Director
Date: Date: ----------------- ---------------------
- - ---------------------------------- ------------------------------ By: Jea Nae B. Wood, Chief By: Donald E. Kieso, Accounting Officer and Controller Director
Date: Date: ----------------- ---------------------
- - ----------------------------------- ------------------------------ By: John W. Castle, Chairman of the By:Louis P. Brady, Vice- Board Chief Executive Officer Chairman of the Board and Director and Director
Date: Date: ----------------- ---------------------
- - ----------------------------------- ------------------------------
By: William R. Monat, Director By: Nancy D. Castle, Director
Date: Date: ----------------- ---------------------