UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934: For the fiscal year ended December 31, 2004
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
Oak 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
(Title of Class)
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [ ] No [X]
As of June 30, 2004, the aggregate market value of the shares held by
non-affiliates was approximately $69,336,000. As of March 25, 2005, 8,468,534
shares of common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Incorporated in
Annual report to shareholders for
fiscal year ended December 31, 2004 Parts II and IV
Proxy statement for annual meeting
of shareholders to be held on June 8, 2005 Part III
Form 10-K Table of Contents
- -------------------------------------------------------------------------------
PART I PAGE #
Item 1 Business 3
Item 2 Properties 9
Item 3 Legal Proceedings 9
Item 4 Submission of Matters to a
Vote of Security Holders 9
PART II
Item 5 Market for the Registrant's Common
Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securitites 10
Item 6 Selected Financial Data 10
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 7A Quantitative and Qualitative Disclosures
About Market Risk 10
Item 8 Consolidated Financial Statements and
Supplementary Data 10
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 10
Item 9A Controls and Procedures 10
PART III
Item 10 Directors and Executive Officers of the Registrant 11
Item 11 Executive Compensation 11
Item 12 Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 11
Item 13 Certain Relationships and Related Transactions 11
Item 14 Principal Accountant Fees and Services 11
PART IV
Item 15 Exhibits and Financial Statement Schedules 12
Signatures 16
2
PART I
Item 1. BUSINESS.
THE REGISTRANT
Tri City Bankshares Corporation (the "Registrant"), a Wisconsin
corporation, was formed November 20, 1970 for the purpose of acquiring the
outstanding shares of Tri City National Bank (the "Bank"). The Bank is a wholly
owned subsidiary of the Registrant.
As of December 31, 2004, the Registrant had total assets of $696.6 million
and total stockholders' equity of $92.5 million.
THE BANK
The Bank was chartered by the Wisconsin Banking Department (now the
Wisconsin Department of Financial Institutions ("DFI")) on October 28, 1963, and
converted to a National Banking Association on June 25, 1969. The Bank is
supervised by the Office of the Comptroller of the Currency ("OCC") and its
deposits are insured by the Federal Deposit Insurance Corporation ("FDIC"). The
Bank conducts business out of its main office located at 6400 South 27th Street,
Oak Creek, Wisconsin. In addition, the Bank maintains 31 other offices in
Wisconsin throughout Milwaukee, Ozaukee, Racine and Waukesha Counties.
The Bank provides a full range of consumer and commercial banking services
to individuals and businesses. The basic services offered include: demand
deposit accounts, money market deposit accounts, NOW accounts, time deposits,
safe deposit services, direct deposits, notary services, money orders, night
depository, travelers' checks, cashier's checks, savings bonds, secured and
unsecured consumer, commercial, installment, real estate and mortgage loans. The
Bank offers automated teller machine ("ATM") cards. In addition, the Bank
maintains an investment portfolio consisting primarily of U.S. agency and state
and political subdivision securities.
As is the case with banking institutions generally, the Bank derives its
revenues from interest on the loan and investment portfolios and fee income
related to loans and deposits. Income derived from the sale of alternative
investment products provides additional fee income. The source of funds for the
lending activities are deposits, repayment of loans, maturity of investment
securities and short-term borrowing through a correspondent banking relationship
and the Federal Reserve Bank of Chicago. Principal expenses are the interest
paid on deposits and borrowings, and operating and general administrative
expenses.
LENDING ACTIVITIES
The Bank offers a range of lending services including secured and unsecured
consumer, commercial, installment, real estate and mortgage loans to
individuals, small business and other organizations that are located in or
conduct a substantial portion of their business in the Bank's market area. The
Bank's total loans as of December 31, 2004 were $471.2 million, or approximately
68% of total assets. Interest rates charged on loans vary with the degree of
risk, maturity and amount of the loan, and are further subject to competitive
pressures, cost and availability of funds and government regulations.
The Bank maintains a comprehensive loan policy that establishes guidelines
with respect to all categories of lending activity. The policy establishes
lending authority for each individual loan officer, officer loan committee and
board of directors lending authority. All loans to directors and executive
officers are approved by the Board of Directors. The loans are concentrated in
three major areas: real estate loans, commercial loans and consumer loans. The
lending strategy is the development of a high quality loan portfolio.
The Bank's real estate loans are collateralized by mortgages and consist
primarily of loans to individuals for the purchase and improvement of real
estate and for the purchase of residential lots and construction of
single-family residential units. The Bank's residential real estate loans
generally are repayable in monthly installments based on up to a thirty-year
amortization schedule.
Commercial loans include loans to individuals and small businesses
including loans for working capital, machinery and equipment purchases, premise
and equipment acquisitions, purchase, improvement and investment in real estate
development and other business needs. Commercial lines of credit are typically
for a one-year term. Other commercial loans with terms or amortization schedules
of longer than one year will normally carry interest rates which vary based on
the term and will become payable in full and are generally refinanced in two to
four years. Commercial loans typically entail a thorough analysis of the
borrower, its industry, current and projected economic conditions and other
factors. The Bank typically requires commercial borrowers to have annual
financial statements and requires appraisals or evaluations in connection with
the loans secured by real estate. The Bank typically requires personal
guarantees from principals involved with closely held corporate borrowers.
3
The Bank's consumer loan portfolio consists primarily of loans to
individuals for various consumer purposes payable on an installment basis. The
loans are generally for terms of five years or less and are collateralized by
liens on various personal assets of the borrower.
DEPOSIT ACTIVITIES
Deposits are the major source of the Bank's funds for lending and other
investment activities. The Bank considers the majority of its regular savings,
investors choice, demand, NOW and money market deposit accounts to be core
deposits. These accounts comprised approximately 85.0% of the Bank's total
deposits at December 31, 2004. Approximately 15.0% of the Bank's deposits at
December 31, 2004 were certificates of deposit. Generally, the Bank attempts to
maintain the rates paid on its deposits at a competitive level. Deposits of
$100,000 and over made up approximately 38.9% of the Bank's total deposits at
December 31, 2004. The majority of the deposits of the Bank are generated from
Milwaukee, Ozaukee, Racine and Waukesha Counties. For additional information
regarding the Bank's deposit accounts, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Interest Rate
Sensitivity Management" and Note 8 of Notes to Consolidated Financial
Statements, incorporated by reference in Item 8 below.
INVESTMENTS
The Bank invests a portion of its assets in U.S. Treasury and U.S.
Governmental agency obligations, FHLMC, FNMA and FHLB securities, state, county
and municipal obligations, collateralized mortgage obligations ("CMO's") and
federal funds sold. The investments are managed in relation to the loan demand
and deposit growth and are generally used to provide for the investment of
excess funds at reduced yields and risks relative to yields and risks of the
loan portfolio, while providing liquidity to fund increases in loan demand or to
offset fluctuations in deposits. For further information regarding the
Registrant's investment portfolio, see Note 3 of Notes to Consolidated Financial
Statements, incorporated by reference in Item 8 below.
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 of 1956,
as amended (the "BHCA"). The Bank is subject to regulation and examination by
the OCC and the FDIC.
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 the
Federal Reserve Board may require. In accordance with Federal Reserve Board
policy, the Registrant is expected 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 and the Bank. 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 stockholders' 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 if warranted by the particular circumstances or risk profiles of
individual banking organizations. The Federal Reserve Board has not advised the
Registrant 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. In addition, a bank holding company's controlled insured
depository institutions are liable for any loss incurred by the FDIC in
connection with the default of, or any FDIC-assisted transaction involving, an
affiliated insured bank or savings association. 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, 2004, the most recent notification from the Federal Reserve Board,
the Registrant was categorized as well capitalized under the regulatory
framework for prompt corrective action. There are no conditions or events since
4
that notification that management believes have changed the Registrant's
category. As of December 31, 2004, the Registrant had a total risk-based capital
ratio of 19.91% a Tier I risk-based capital ratio of 18.77% and a leverage ratio
of 13.61%. The Registrant and the Bank were deemed well capitalized as of
December 31, 2004 and 2003.
Current federal law provides that 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 Registrant 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, insurance company portfolio investment, financial advisory,
securities 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 Registrant has determined not to
become certified as a financial holding company at this time. The Registrant may
reconsider this determination in the future.
In 2001, Congress enacted the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (the "USA PATRIOT Act"). The USA PATRIOT Act is designed to deny terrorists
and criminals the ability to obtain access to the United States financial
system, and has significant implications for depository institutions, brokers,
dealers, and other businesses involved in the transfer of money. The USA PATRIOT
Act mandates or requires financial services companies to implement additional
policies and procedures with respect to, or additional measures designed to
address, any or all of the following matters, among others: money laundering,
terrorist financing, identifying and reporting suspicious activities and
currency transactions, and currency crimes.
The earnings and business of the Registrant and the Bank are also affected
by the general economic and political conditions in the United States and abroad
and by the monetary and fiscal policies of various federal agencies. The Federal
Reserve Board impacts the competitive conditions under which the Registrant
operates by determining the cost of funds obtained from money market sources for
lending and investing and by exerting influence on interest rates and credit
conditions. In addition, legislative and economic factors can be expected to
have an ongoing impact on the competitive environment within the financial
services industry. The impact of fluctuating economic conditions and federal
regulatory policies on the future profitability of the Registrant and its
subsidiary cannot be predicted with certainty.
INDUSTRY RESTRUCTURING
For well over a decade, the banking industry has been undergoing a
restructuring process which is anticipated to continue. The restructuring has
been caused by product and technological innovations in the financial services
industry, deregulation of interest rates, and increased competition from foreign
and nontraditional banking competitors, and has been characterized principally
by the gradual erosion of geographic barriers to intrastate and interstate
banking and the gradual expansion of investment and lending authorities for bank
institutions.
COMPETITION
The Bank's service area includes portions of Milwaukee, Ozaukee, Racine and
Waukesha Counties. In Milwaukee County, 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. Ozaukee County, with a
population of approximately 84,800 residents, has twelve banks with thirty-one
offices and four savings banks with nine offices. Racine County, with a
population of approximately 192,300 residents has twelve banks with fifty-eight
offices and five savings banks with eleven offices. Waukesha County, with a
population of approximately 374,100 residents, has twenty-five banks with one
hundred twenty-six offices and eleven savings banks with thirty-six offices. In
addition to banks and savings banks, significant competition comes from credit
unions, security and brokerage firms, mortgage companies, insurance companies
and other providers of financial services in the area.
EMPLOYEES
As of December 31, 2004, the Registrant employed 273 full-time employees
and 98 part-time employees. The employees are not represented by a collective
bargaining unit. The Registrant considers relations with employees to be good.
5
STATISTICAL PROFILE AND OTHER FINANCIAL DATA
Statistical information relating to the Registrant and its subsidiaries
on a consolidated basis, as required by Guide 3 of the Securities and Exchange
Commission Guides for Preparation and Filing of Reports and Registration
Statements and Reports, is set forth as follows:
(1) Average Balances and Interest Rates for each of the last three fiscal years
is included in Item 7, Management's Discussion and Analysis of Financial
Position and Results of Operations, incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operation."
(2) Interest Income and Expense Volume and Rate Change for each of the last two
years is included in Item 7, Management's Discussion and Analysis of
Financial Position and Results of Operations, incorporated herein by
reference to Registrant's 2004 Annual Report to Stockholders under the
caption entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operation."
(3) Investment Securities Portfolio Maturity Distribution at December 31, 2004
is included in Item 7, Management's Discussion and Analysis of Financial
Position and Results of Operations, incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operation."
(4) Investment Securities Portfolio for each of the last three years is
included in Item 7, Management's Discussion and Analysis of Financial
Position and Results of Operations, incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operation."
(5) Loan Portfolio Composition for each of the last five years is included in
Item 7, Management's Discussion and Analysis of Financial Position and
Results of Operations, incorporated herein by reference to Registrant's
2004 Annual Report to Stockholders under the caption entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operation."
(6) Summary of Loan Loss Experience for each of the last five years is included
in Item 7, Management's Discussion and Analysis of Financial Position and
Results of Operations, incorporated herein by reference to Registrant's
2004 Annual Report to Stockholders under the caption entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operation."
(7) Average Daily Balance of Deposits and Average Rate Paid on Deposits for
each of the last three years is included in Item 7, Management's Discussion
and Analysis of Financial Position and Results of Operations, incorporated
herein by reference to Registrant's 2004 Annual Report to Stockholders
under the caption entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operation."
The following additional tables set forth certain statistical information
relating to the Registrant and its subsidiaries on a consolidated basis.
6
LOAN PORTFOLIO
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.
(Dollars in Thousands)
December 31,
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
Nonaccrual loans $ 275 $ 181 $ 337 $ 128 $ 214
Loans past due 90 days
or more 1,688 1,280 2,361 2,511 1,669
------- ------- ------- ------- -------
Total nonperforming loans $ 1,963 $ 1,461 $ 2,698 $ 2,639 $ 1,883
======= ======= ======= ======= =======
Ratio of nonaccrual loans to
total loans 0.06% 0.04% 0.08% 0.03% 0.06%
Ratio of nonperforming loans
to total loans 0.42% 0.35% 0.68% 0.71% 0.52%
Interest income of $8,087 was recognized during 2004 on loans that were
accounted for on a nonaccrual basis. An additional $4,416 of interest income
would have been recorded in 2004 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, 2004 or 2003 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.
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,
2004 2003 2002
Percentage of net income to:
Average stockholders equity 9.49% 10.56% 9.02%
Average total assets 1.26% 1.41% 1.14%
Percentage of dividends declared per
common share to net income per
common share 69.27% 59.65% 66.56%
Percentage of average stockholders'
equity to daily average total assets 13.29% 13.30% 12.66%
7
SHORT-TERM BORROWINGS
(Dollars in Thousands)
Information relating to short-term borrowings follows:
Federal Funds Purchased
And Securities Sold Other
Under Agreements Short-Term
to Repurchase Borrowings
Balance at December 31:
2004 $ 9,486 $ 2,748
2003 $ 9,014 $ 1,534
2002 $ 1,500 $ 6,000
Weighted average interest rate at year end:
2004 2.36% 1.02%
2003 1.20% 0.78%
2002 0.41% 1.06%
Maximum amount outstanding at any month's end
2004 $25,665 $ 2,748
2003 $ 9,014 $ 4,636
2002 $17,178 $ 6,000
Average amount outstanding during the year:
2004 $13,793 $ 1,415
2003 $ 1,682 $ 1,753
2002 $ 4,140 $ 1,959
Average interest rate during the year:
2004 1.43% 1.14%
2003 1.16% 0.94%
2002 1.24% 1.41%
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.
8
Item 2. PROPERTIES
Tri City National Bank has thirty-two locations in the Metropolitan Milwaukee
area, including Oak Creek, Milwaukee, Brookfield, Menomonee Falls, West Allis,
Hales Corners, Wauwatosa, Cedarburg, Sturtevant and South Milwaukee. The Bank
owns fourteen of its locations and leases eighteen locations, including fifteen
full service banking centers located in food discount centers.
Registrant believes that its bank locations are in buildings that are
attractive, efficient and adequate for their operations, with sufficient space
for parking and drive-in facilities.
Item 3. LEGAL PROCEEDINGS
The Registrant is not party to any material legal proceedings.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted during the fourth quarter of 2004 to a vote of
security holders.
9
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
----------------------------------------------------------------------
ISSUER PURCHASES OF EQUITY SECURITTIES
--------------------------------------
The information required by Item 5 is incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Market for Corporation's Common Stock and Related Stockholder Matters" (Page
29).
Item 6. SELECTED FINANCIAL DATA
-----------------------
The information required by Item 6 is incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Selected Financial Data" (Page 28).
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATION
--------------------
The information required by Item 7 is incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" (Pages 4 to 27).
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The information required by Item 7A is incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders under the caption entitled
"Quantitative and Qualitative Disclosures About Market Risk" (Pages 22 to 25).
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------
The information required by Item 8 is incorporated herein by reference to
Registrant's 2004 Annual Report to Stockholders (Pages 32 to 57).
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Effective August 13, 2003, the Registrant dismissed its independent accounting
firm, Ernst & Young LLP ("Ernst & Young"), and hired the firm of Virchow, Krause
& Company, LLP ("Virchow Krause"). The change was made based upon the
recommendation of the Audit Committee of the Board of Directors, after
soliciting bids from Ernst & Young, Virchow Krause and other accounting firms.
The reports of Ernst & Young for the year ended December 31, 2002 did not
contain an adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope, or accounting principles. There were no
disagreements on any matter of accounting principles or practices, financial
statements disclosure, or auditing scope or procedure with Ernst & Young during
the year ended December 31, 2002.
Item 9A. 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. At the end of the last fiscal quarter,
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-15 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 as of the end of the period covered by
this report.
There have been no changes in the Registrant's internal control over financial
reporting identified in connection with the evaluation discussed above that
occurred during the Registrant's last fiscal quarter that have materially
affected, or are reasonable likely to materially affect, the Registrant's
internal control over financial reporting.
10
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 8, 2005 ("The 2005 Proxy Statement") under the captions entitled
"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance".
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference to the
2005 Proxy Statement under the caption entitled "Executive Compensation".
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
------------------------------------------------------------------
RELATED STOCKHOLDER MATTERS
---------------------------
The information required by Item 12 is incorporated herein by reference to the
2005 Proxy Statement under the caption entitled "Security Ownership of Certain
Beneficial Owners and Management" and "Equity Compensation Plan Information".
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The information required by Item 13 is incorporated herein by reference to the
2005 Proxy Statement under the caption entitled "Loans and Other Transactions
with Management".
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
--------------------------------------
The information required by Item 14 is incorporated herein by reference to the
2005 Proxy Statement under the caption entitled "Principal Accountant Fees and
Services."
11
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
-------------------------------------------
(a) (1) and (2) Financial statements and financial statement schedules
------------------------------------------------------------------
The response to this portion of Item 15 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 3.2 to Registrant's current report on
Form 8-K filed February 12, 2003.
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 10.1* Tri City Bankshares Corporation 2003 Stock
Purchase Plan, incorporated herein by reference
to Exhibit 99 of the Registrant's Registration
Statement on Form S-8 (Reg. No. 333-111617)
filed on December 30, 2003.
Exhibit 10.2* Summary of compensation arrangements with
certain persons
Exhibit 10.3* Summary of Bonus Plan
Exhibit 10.4* Summary of director compensation
Exhibit 10.5* Description of consulting arrangements between
Registrant and Mr. William J. Werry
Exhibit 13 - Annual Report to Stockholders for the year
ended December 31, 2004.
With the exception of the information
incorporated by reference into Items 5, 6, 7,
7A, and 8 of this Form 10-K, the 2004 Annual
Report to Stockholders is not deemed filed as
part of this report.
Exhibit 21 - Subsidiaries of Registrant.
Exhibit 23.1 - Consent of Virchow, Krause & Company, LLP
Exhibit 23.2 - Consent of Ernst & Young LLP
12
Exhibit 31 - Rule 13a -14(a) or 15d-14(a) Under
the Securities and Exchange Act of
1934, as amended, Certification
Exhibit 32 - 18 U.S.C. Section 1350 Certification
Exhibit 99.1 - Cautionary Statements
*A Management contract or compensation plan or arrangement
13
PART IV
ANNUAL REPORT ON FORM 10-K
ITEM 15(a)(1), (2) and (3)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES
CERTAIN EXHIBITS
Year Ended December 31, 2004
TRI CITY BANKSHARES CORPORATION
OAK CREEK, WISCONSIN
14
FORM 10-K-ITEM 15(a)(1) and (2)
TRI CITY BANKSHARES CORPORATION
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements and reports 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, 2004, are
incorporated by reference in Item 8:
Consolidated balance sheets-December 31, 2004 and 2003
Consolidated statements of income-Years ended December 31, 2004, 2003
and 2002
Consolidated statements of stockholders' equity-Years ended December 31,
2004, 2003 and 2002.
Consolidated statements of cash flows-Years ended December 31, 2004,
2003 and 2002
Notes to consolidated financial statements-Years ended December 31,
2004, 2003 and 2002
Independent auditor's report
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.
15
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 28, 2005
--------------
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. 3/28/05
----------------------- -------
Henry Karbiner, Jr. Chairman of the Board and
Chief Executive Officer
(Principal Executive and
Financial Officer)
/s/ Ronald K. Puetz 3/28/05
------------------- -------
Ronald K. Puetz Executive Vice-President
and Director
/s/ Scott A. Wilson 3/28/05
------------------- -------
Scott A. Wilson Senior Vice President and
Secretary and Director
/s/ Robert W. Orth 3/28/05
------------------ -------
Robert W. Orth Senior Vice-President and
Director
/s/ Thomas W. Vierthaler 3/28/05
------------------------ -------
Thomas W. Vierthaler Vice President and Comptroller
(Principal Accounting Officer)
/s/ Frank J. Bauer Director 3/28/05
------------------- --------
Frank J. Bauer
/s/ William Beres Director 3/28/05
----------------- -------
William Beres
/s/ Sanford Fedderly Director 3/28/05
-------------------- -------
Sanford Fedderly
16
/s/ Scott D. Gerardin Director 3/28/05
--------------------- -------
Scott D. Gerardin
______________ Director ______
William Gravitter
/s/ Christ Krantz Director 3/28/05
----------------- -------
Christ Krantz
/s/Agatha T. Ulrich Director 3/28/05
------------------- -------
Agatha T. Ulrich
_______________ Director _______
David A. Ulrich, Jr.
/s/William J. Werry Director 3/28/05
------------------- -------
William J. Werry
17