-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FKrvvWFp90mu45VmtXJzxXVVM88pnOsyKsCdvY9fnroQmmxdm4Vh+isgb0Wip7X2 P7d7jWDSN46UEnLwVQoF2Q== 0000931763-01-501435.txt : 20010814 0000931763-01-501435.hdr.sgml : 20010814 ACCESSION NUMBER: 0000931763-01-501435 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARDINAL BANKSHARES CORP CENTRAL INDEX KEY: 0001022759 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 541804471 STATE OF INCORPORATION: VA FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-28780 FILM NUMBER: 1707079 BUSINESS ADDRESS: STREET 1: P O BOX 215 CITY: FLOYD STATE: VA ZIP: 24091 BUSINESS PHONE: 5407454191 10QSB 1 d10qsb.txt FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) X Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2001 or _____Transition Report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the transition period from ______________ to _________________. Commission File No. -0-28780- CARDINAL BANKSHARES CORPORATION (Exact name of the registrant as specified in its charter) Virginia 54-1804471 (State of Incorporation) (I.R.S. Employer Identification No.) 101 Jacksonville Circle (P. O. Box 215), Floyd VA 24091 (Address of principal executive offices) (540) 745-4191 (Issuer's telephone number, including area code) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: The number of shares outstanding of the Issuer's Common Stock, $10 Par Value, as of August 10, 2001 was 1,535,733. Transitional Small Business Disclosure Format (check one): Yes No X Page 1 of 14. CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES FORM 10-QSB INDEX - -------------------------------------------------------------------------------- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The consolidated financial statements of Cardinal Bankshares Corporation (the "Company") are set forth in the following pages. Consolidated Balance Sheets as of June 30, 2001 and December 31,2000...........................................................3 Consolidated Statements of Operations for the Six Months Ended June 30, 2001 and 2000........................................4 Consolidated Statements of Operations for the Three Months Ended June 30, 2001 and 2000........................................5 Consolidated Statements of Stockholders' Equity for the Six Months Ended June 30, 2001 and the Year Ended December 31, 2000..........................................................6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001 and 2000.............................................7-8 Notes to Consolidated Financial Statements...............................9-10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........................................10-11 PART II. OTHER INFORMATION................................................11-12 All schedules have been omitted because they are inapplicable or the required information is provided in the financial statements, including the notes thereto. CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets June 30, 2001 and December 31, 2000 - -------------------------------------------------------------------------------- June 30, December 31, 2001 2000 ------------ ------------ (Unaudited) (Audited) ASSETS Cash and due from banks $ 8,794,436 $ 2,631,298 Interest-bearing deposits with banks 0 0 Federal funds sold 4,630,000 4,475,000 Investment securities available for sale 29,488,600 37,320,415 Investment securities held to maturity 19,688,956 19,351,824 Restricted equity securities 630,700 630,700 Loans, net of allowance for credit losses of $1,147,905 in 2001 and $1,133,993 in 2000 105,058,153 92,601,863 Property and equipment, net 2,404,415 2,486,648 Accrued income 1,211,986 1,288,241 Foreclosed assets 214,151 428,151 Other assets 1,092,691 2,025,775 ------------ ------------ Total assets $173,214,088 $163,239,915 ============ ============ LIABILITIES Noninterest bearing deposits $ 18,201,259 $ 18,346,247 Interest-bearing deposits 133,845,268 124,687,105 ------------ ------------ Total deposits 152,046,527 143,033,352 Accrued interest payable 287,074 272,507 Other liabilities 315,000 255,968 ------------ ------------ Total liabilities 152,648,601 143,561,827 ------------ ------------ Commitments and contingencies STOCKHOLDERS'EQUITY: Common stock, $10 par value, authorized 5,000,000 shares, issued 1,535,733 shares in 2001 and 511,911 in 2000 15,357,330 5,119,110 Surplus 2,925,150 2,925,150 Retained earnings 2,265,661 11,764,483 Unrealized appreciation (depreciation) on investment securities available for sale 17,346 (130,655) ------------ ------------ Total stockholders' equity 20,565,487 19,678,088 ------------ ------------ Total liabilities and stockholders' equity $173,214,088 $163,239,915 ============ ============ See Notes to Consolidated Financial Statements 3 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the Six Months ended June 30, 2001 and 2000 (Unaudited) - -------------------------------------------------------------------------------- Six Months Ended June 30, 2001 2000 (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 4,473,344 $3,816,509 Federal funds sold 170,012 170,270 Taxable investment securities 1,050,797 1,196,011 Investment securities exempt from federal tax 478,466 456,109 Deposits with banks 3,242 20,291 ----------- ---------- Total interest income 6,175,861 5,659,190 INTEREST EXPENSE ON DEPOSITS: Deposits 3,235,750 2,904,504 Federal funds purchased 0 0 Other borrowed funds 0 0 ----------- ---------- Total interest expense 3,235,750 2,904,504 ----------- ---------- Net interest income 2,940,111 2,754,686 PROVISION FOR CREDIT LOSSES 255,000 250,000 ----------- ---------- Net interest income after provision for loan loss 2,685,111 2,504,686 NON INTEREST INCOME: Service charges on deposit accounts 136,851 101,882 Other service charges and fees 38,350 23,130 Net realized gains on sales of Securities 44,340 0 Other income 82,964 39,774 ----------- ---------- Total non interest income 302,505 164,786 NON INTEREST EXPENSE: Salaries and employee benefits 749,112 857,880 Occupancy expense 94,726 82,684 Equipment expense 274,230 130,838 Other expense 509,361 470,705 ----------- ---------- Total non interest expense 1,627,429 1,542,107 ----------- ---------- Income before income taxes 1,360,187 1,127,365 Income tax expense 329,000 238,314 ----------- ---------- Net income $ 1,031,187 $ 889,051 =========== ========== BASIC EARNINGS PER SHARE $ 0.67 $ 0.58 See Notes to Consolidated Financial Statements 4 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the Three Months ended June 30, 2001 and 2000 (Unaudited) - -------------------------------------------------------------------------------- Three Months Ended June 30, 2001 2000 (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 2,308,090 $ 1,857,884 Federal funds sold 96,659 59,227 Taxable investment securities 475,486 607,356 Investment securities exempt from federal tax 240,792 236,282 Deposits with banks 3,242 1,471 ----------- ---------- Total interest income 3,124,269 2,762,220 INTEREST EXPENSE ON DEPOSITS: Deposits 1,617,870 1,449,690 Federal funds purchased 0 0 Other borrowed funds 0 0 ----------- ---------- Total interest expense 1,617,870 1,449,690 ----------- ---------- Net interest income 1,506,399 1,312,530 PROVISION FOR CREDIT LOSSES 157,500 130,000 ----------- ---------- Net interest income after provision for loan loss 1,348,899 1,182,530 NON INTEREST INCOME: Service charges on deposit accounts 67,961 53,276 Other service charges and fees 20,741 13,357 Net realized gains on sales of Securities 40,920 0 Other income 41,706 20,203 ----------- ---------- Total non interest income 171,328 86,836 NON INTEREST EXPENSE: Salaries and employee benefits 297,412 467,927 Occupancy expense 41,243 41,708 Equipment expense 204,663 60,546 Other expense 287,659 258,115 ----------- ---------- Total non interest expense 830,977 828,296 ----------- ---------- Income before income taxes 689,250 441,070 Income tax expense 199,304 77,765 ----------- ---------- Net income $ 489,946 $ 363,305 =========== ========== BASIC EARNINGS PER SHARE $ 0.32 $ 0.24 See Notes to Consolidated Financial Statements 5 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders' Equity For the Six Months ended June 30, 2001 (Unaudited) and the year ended December 31, 2000 (Audited) - 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ACCUMULATED TOTAL OTHER STOCK- COMMON RETAINED COMPREHENSIVE HOLDERS' STOCK SURPLUS EARNINGS INCOME(LOSS) EQUITY ------------ -------------- ------------ ------------ ------------ January 1, 2000 $ 5,117,710 $ 2,925,150 $ 10,514,759 $ (800,022) $ 17,757,597 Net income -- -- 1,825,938 -- 1,825,938 Net change in unrealized depreciation on investment securities available for sale, net of income taxes -- -- -- 669,367 669,367 ------------ 2,495,305 Dividends paid ($1.18 per share) -- -- (582,014) -- (582,014) Common stock purchased (200,640) -- (584,763) -- (785,403) Common stock reissued 202,040 -- 590,563 -- 792,603 ------------ -------------- ------------ ------------ ------------ 5,119,110 2,925,150 11,764,483 (130,655) 19,678,088 Net income -- -- 1,031,187 -- 1,031,187 Net change in unrealized depreciation on investment securities available for sale, net of income taxes -- -- -- 148,001 148,001 ------------ 1,179,188 Dividends paid ($0.19 per share) -- -- (291,789) -- (291,789) Stock split (3 for 1) effected in the form of a dividend 10,238,220 -- (10,238,220) -- -- ------------ -------------- ------------ ------------ ------------ June 30, 2001 $ 15,357,330 $ 2,925,150 $ 2,265,661 $ 17,346 $ 20,565,487 ============ ============== ============ ============ ============
See Notes to Consolidated Financial Statements 6 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Six Months ended June 30, 2001 and 2000 (Unaudited) - ------------------------------------------------------------------------------- Six Months Ended June 30, 2001 2000 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,031,187 $ 889,051 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 123,291 86,929 Accretion of discounts on securities (19,316) (25,765) Provision for loan losses 255,000 250,000 Deferred income taxes 76,243 77,063 Net realized gains on securities (44,340) 0 Deferred compensation & pension expense 51,377 0 Changes in assets and liabilities: Accrued income 76,255 (62,163) Other assets 1,360,654 (1,013,154) Accrued interest payable 14,567 (8,293) Other liabilities 7,655 123,311 ------------ ------------ Net cash provided by operating activities 2,932,573 316,979 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in federal funds sold (155,000) 3,850,000 Purchases of investment securities (6,792,062) (6,377,490) Sale of investment securities 0 0 Net decrease in interest-bearing deposits 0 2,000,000 Maturity of investment securities 14,202,400 2,122,869 Net increase in loans (12,711,290) (295,966) Net proceeds from sale of other real estate 6,729 0 Purchases of properties and equipment (41,058) (180,765) ------------ ------------ Net cash (used) in investing activities (5,490,821) 1,118,648 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in non-interest bearing deposits (144,988) 1,665,596 Net (decrease) in interest bearing deposits 9,158,163 (3,364,504) Dividends paid (291,789) (281,551) Net (decrease) fed funds purchased 0 0 Common Stock Purchased 0 (714,421) Common Stock Reissued 0 31,401 ------------ ------------ Net cash used in financing activities 8,721,386 (2,663,479) ------------ ------------ Net decrease in cash & cash equivalents 6,163,138 (1,227,852) CASH AND CASH EQUIVALENTS, BEGINNING 2,631,298 3,775,280 ------------ ------------ CASH AND CASH EQUIVALENTS, ENDING $ 8,794,436 $ 2,547,428 ============ ============ See Notes to Consolidated Financial Statements 7 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows, continued For the Six Months ended June 30, 2001 and 2000 (Unaudited) - ------------------------------------------------------------------------------- 2001 2000 ----------- ----------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 3,221,183 $ 2,912,797 ----------- ----------- Income taxes paid $ 250,060 $ 160,000 ----------- ----------- SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES: Other real estate acquired in settlement of loans $ 0 $ 0 See Notes to Consolidated Financial Statements 8 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements - -------------------------------------------------------------------------------- ITEM 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION NOTE 1. BASIS OF PRESENTATION: Cardinal Bankshares Corporation (the Company) was incorporated as a Virginia corporation on March 12, 1996 to acquire the stock of The Bank of Floyd (the Bank). The Bank was acquired by the Company on July 1, 1996 and used the pooling of interests accounting method. The consolidated financial statements as of June 30, 2001 and for the periods ended June 30, 2001 and 2000 included herein, have been prepared by Cardinal Bankshares Corporation, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the information furnished in the interim consolidated financial statements reflects all adjustments necessary to present fairly the Company's consolidated financial position, results of operations, changes in stockholders' equity and cash flows for such interim periods. Management believes that all interim period adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the Company's audited financial statements and the notes thereto as of December 31, 2000, included in the Company's Annual Report for the fiscal year ended December 31, 2000. The Bank of Floyd and its wholly owned subsidiary, FBC, Inc. are organized and incorporated under the laws of the Commonwealth of Virginia. As a state chartered Federal Reserve member, the Bank is subject to regulation by the Virginia Bureau of Financial Institutions and the Federal Reserve. FBC, Inc.'s assets and operations consist primarily of a minority interest in a title insurance company. The Bank serves the counties of Floyd, Carroll, Montgomery, and Roanoke, Virginia and the City of Roanoke, Virginia through five banking offices. All significant intercompany accounts and transactions have been elimi- nated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. NOTE 2. ALLOWANCES FOR CREDIT LOSSES The following is an analysis of the allowance for credit losses for the six months ended June 30. 2001 2000 ----------- ----------- Balance at January 1 $ 1,133,993 $ 1,661,521 Provision charged to operations 255,000 250,000 Loans charged off, net of recoveries (241,088) (801,276) ----------- ----------- Balance at June 30 $ 1,147,905 $ 1,110,245 =========== =========== NOTE 3. COMMITMENTS AND CONTINGENCIES The Bank's exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as for on-balance-sheet instruments. A summary of the Bank's commitments at June 30, is as follows: 2001 2000 ----------- ----------- Commitments to extend credit 13,278,000 $ 6,697,608 Standby letters of credit 612,000 638,000 ----------- ----------- $13,890,000 $ 7,335,608 =========== =========== NOTE 4. STOCK SPLIT On April 25, 2001, the Company announced a 3-for-1 stock split to be distributed to all stockholders of record as of April 25, 2001. All references in the financial statements to number of shares and per share amounts have been retroactively restated to reflect the split. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Comparision of Six Months Ended June 30, 2001 and 2000 Net income for the six months ended June 30, 2001 was $1,031,187, an increase of 16% compared to June 30, 2000. Net interest income increased 7% from June 30, 2000 to June 30, 2001. Provision for loan losses increased by $5,000. Management believes the provision and the resulting allowance for credit losses to be adequate. Interest income increased $516,671 from June 30, 2001 to 2000 as interest expense increased $331,246 over 2000. Comparison of three months ended June 30, 2001 and 2000. For the three months ended June 30, 2001, the Bank earned $489,946 in net income compared to $363,305 for the quarter ended June 30, 2000. Interest income was $3,124,269 for the quarter ended June 30, 2001, compared to $2,762,220 for the same period of 2000. Interest expense for the quarter ended June 30, 2001 was $1,617,870, up $168,180 from $1,449,690 for the quarter ended June 30, 2000. The provision for credit losses was $157,500 for the quarter ended June 30, 2001 and $130,000 for the quarter ended June 30, 2000. Management believes the provision and the resulting allowance for credit losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at June 30, 2001 were $173,214,088 compared to $163,239,915 at December 31, 2000, an increase of $9,974,173. Federal funds sold increased by $155,000 and other assets decreased by $933,084 for the period. Gross loans increased $12,470,202 compared to December 31, 2000 and accounted for 61% of total assets at June 30, 2001. Deposits increased $9,013,175. Loans to deposits at June 30, 2001 was 70% compared to 66% at December 31, 2000. CAPITAL ADEQUACY Shareholder's equity amounted to $20,565,487 at June 30, 2001, an increase of $887,399 compared to the December 31, 2000 balance of $19,678,088. The increase was a result of earnings and an increase in the market value of securities offset by dividends paid. 10 Regulatory guidelines relating to capital adequacy provide minimum risk- based ratios at the Bank level which assess capital adequacy while encompassing all credit risks, including those related to off-balance sheet activities. The Bank of Floyd (a wholly owned subsidiary of Cardinal Bankshares Corporation) exceeds all regulatory capital guidelines and is considered to be well capitalized. At June 30, 2001 the Bank had a ratio of Tier 1 capital to risk-weighted assets of 13.96%, a ratio of total risk-based capital to risk-weighted assets of 15.02% and a leverage ratio of Tier 1 capital to average total assets for the quarter ended June 30, 2001 of 8.99%. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no matters pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is subject. ITEM 2. CHANGES IN SECURITIES (a) Not applicable. (b) Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual Meeting of Stockholders was held on April 25, 2001. (b) The following directors were elected to serve a one-year term to the date of the 2002 Annual Meeting of Stockholders with at least 363,786 votes: K. Venson Bolt, William R. Gardner, Jr.,C.W. Harman, Kevin D. Mitchell, Ronald Leon Moore, and Dorsey H. Thompson. (c) The independent auditors, Larrowe & Company, PLC, were elected with at least 353,179 votes. (d) N/A ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 11 SIGNATURES Pursuant to the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARDINAL BANKSHARES CORPORATION Date: August 10, 2001 By: /s/ Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer 12 -----END PRIVACY-ENHANCED MESSAGE-----