-----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, SJR7k5Eb4sWLlaCP/k1q15P9STlIHs/s6vddDaZxqm7tBfJVnLO47tJWrCtdOtap V7aPj6Kn07wUcFaG+gyoDg== /in/edgar/work/20000814/0000950168-00-001873/0000950168-00-001873.txt : 20000921 0000950168-00-001873.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950168-00-001873 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARDINAL BANKSHARES CORP CENTRAL INDEX KEY: 0001022759 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 541804471 STATE OF INCORPORATION: VA FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28780 FILM NUMBER: 696680 BUSINESS ADDRESS: STREET 1: P O BOX 215 CITY: FLOYD STATE: VA ZIP: 24091 BUSINESS PHONE: 5407454191 10QSB 1 0001.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, 2000 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, 2000 was 492,411. 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, 2000 and December 31, 1999.......................................................3 Consolidated Statements of Operations for the Six Months Ended June 30, 2000 and 1999.....................................4 Consolidated Statements of Operations for the Three Months Ended June 30, 2000 and 1999.....................................5 Consolidated Statements of Stockholders' Equity for the Six Months Ended June 30, 2000 and the Year Ended December 31, 1999.......................................................6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999..........................................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, 2000 and December 31, 1999 ________________________________________________________________________________
June 30, December 31, 2000 1999 ____________ ____________ (Unaudited) (Audited) ASSETS Cash and due from banks $ 2,547,428 $ 3,775,280 Interest-bearing deposits with banks 0 2,000,000 Federal funds sold 3,125,000 6,975,000 Investment securities available for sale 36,549,889 33,213,933 Investment securities held to maturity 19,886,872 19,169,099 Loans, net of allowance for credit losses of $1,110,245 in 2000 and $1,661,521 in 1999 87,730,891 87,684,925 Property and equipment, net 2,538,191 2,444,355 Accrued income 1,235,278 1,173,115 Other assets 2,717,932 1,704,778 ____________ ____________ Total assets $156,331,481 $158,140,485 ============ ============ LIABILITIES Demand deposits $ 17,919,231 $ 16,783,239 Interest-bearing deposits 9,989,835 10,767,129 Savings deposits 20,208,133 18,901,235 Large denomination time deposits 16,882,949 18,142,525 Other time deposits 73,108,608 75,213,536 ___________ ___________ Total deposits 138,108,756 139,807,664 Federal funds purchased 0 0 Other borrowed funds 0 0 Accrued interest payable 228,782 237,075 Other liabilities 461,460 338,149 ___________ ___________ Total liabilities 138,798,998 140,382,888 ____________ ____________ Commitments and contingencies STOCKHOLDERS'EQUITY: Common stock, $10 par value, authorized 5,000,000 shares, issued 494,211 shares in 2000 and 511,771 in 1999 4,942,110 5,117,710 Surplus 2,925,150 2,925,150 Retained earnings 10,614,839 10,514,759 Unrealized appreciation (depreciation) on investment securities available for sale (949,616) (800,022) ___________ ___________ Total stockholders' equity 17,532,483 17,757,597 ___________ ___________ Total liabilities and stockholders' equity $156,331,481 $158,140,485 ============ ============
See Notes to Consolidated Financial Statements 3 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the Six Months ended June 30, 2000 and 1999 (Unaudited) ________________________________________________________________________________
Six Months Ended June 30, 2000 1999 (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 3,816,509 $3,852,638 Federal funds sold 170,270 234,343 Taxable investment securities 1,196,011 1,414,960 Investment securities exempt from federal tax 456,109 27,269 Deposits with banks 20,291 0 ___________ __________ Total interest income 5,659,190 5,529,210 INTEREST EXPENSE ON DEPOSITS: Deposits 2,904,504 2,815,497 Federal funds purchased 0 0 Other borrowed funds 0 0 ___________ __________ Total interest expense 2,904,504 2,815,497 ___________ __________ Net interest income 2,754,686 2,713,713 PROVISION FOR CREDIT LOSSES 250,000 56,721 __________ __________ Net interest income after provision for loan loss 2,504,686 2,656,992 NON INTEREST INCOME: Service charges on deposit accounts 101,882 83,558 Other service charges and fees 23,130 0 Net realized gains on sales of Securities 0 0 Other income 39,774 89,961 __________ __________ Total non interest income 164,786 173,519 NON INTEREST EXPENSE: Salaries and employee benefits 857,880 1,033,290 Occupancy expense 82,684 71,780 Equipment expense 130,838 125,690 Other expense 470,705 348,628 __________ __________ Total non interest expense 1,542,107 1,579,388 __________ __________ Income before income taxes 1,127,365 1,251,123 Income tax expense 238,314 311,553 __________ __________ Net income $ 889,051 $ 939,570 =========== =========== BASIC EARNINGS PER SHARE $ 1.75 $ 1.84
See Notes to Consolidated Financial Statements 4 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the Three Months ended June 30, 2000 and 1999 (Unaudited) ________________________________________________________________________________
Three Months Ended June 30, 2000 1999 (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 1,857,884 $1,866,961 Federal funds sold 59,227 112,402 Taxable investment securities 607,356 707,008 Investment securities exempt from federal tax 236,282 13,401 Deposits with banks 1,471 0 ___________ __________ Total interest income 2,762,220 2,699,772 INTEREST EXPENSE ON DEPOSITS: Deposits 1,449,690 1,397,748 Federal funds purchased 0 0 Other borrowed funds 0 0 __________ __________ Total interest expense 1,449,690 1,397,748 __________ __________ Net interest income 1,312,530 1,302,024 PROVISION FOR CREDIT LOSSES 130,000 26,721 __________ __________ Net interest income after provision for loan loss 1,182,530 1,275,303 NON INTEREST INCOME: Service charges on deposit accounts 53,276 46,931 Other service charges and fees 13,357 0 Net realized gains on sales of Securities 0 0 Other income 20,203 43,403 __________ __________ Total non interest income 86,836 90,334 NON INTEREST EXPENSE: Salaries and employee benefits 467,927 566,903 Occupancy expense 41,708 33,834 Equipment expense 60,546 67,652 Other expense 258,115 132,691 __________ __________ Total non interest expense 828,296 801,080 __________ __________ Income before income taxes 441,070 564,557 Income tax expense 77,765 132,884 __________ __________ Net income $ 363,305 $ 431,673 ========== =========== BASIC EARNINGS PER SHARE $ 0.72 $ 0.84
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, 2000 (Unaudited) and the year ended December 31, 1999 (Audited) ________________________________________________________________________________
ACCUMULATED TOTAL OTHER STOCK- COMMON RETAINED COMPREHENSIVE HOLDERS' STOCK SURPLUS EARNINGS INCOME(LOSS) EQUITY __________ _______ __________ ____________ ________ January 1, 1999 $5,119,110 $2,925,150 $ 9,123,733 $ 153,132 $17,321,125 Net income - - 1,965,133 - 1,965,133 Net change in unrealized depreciation on investment securities available for sale, net of income taxes - - - (953,154) (953,154) 1,011,979 Dividends paid ($1.11 per share) - - (568,147) - (568,147) Common stock purchased (4,300) - (18,385) - (22,685) Common stock reissued 2,900 - 12,425 - 15,325 _________ _________ __________ _________ __________ December 31, 1999 $5,117,710 $2,925,150 $10,514,759 $ (800,022) $17,757,597 _________ _________ __________ _________ __________ Net income - - 889,051 - 889,051 Net change in unrealized depreciation on investment securities available for sale, net of income taxes - - - (149,594) (149,594) - 739,457 Dividends paid ($0.57 per share) - - (281,551) - (281,551) Common stock purchased (182,460) - (531,961) - (714,421) Common stock reissued 6,860 - 24,541 - 31,401 __________ __________ ___________ ___________ ___________ June 30, 2000 $4,942,110 $2,925,150 $10,614,839 $ (949,616) $17,532,483 ========== ========== =========== =========== ===========
See Notes to Consolidated Financial Statements 6 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the Six Months ended June 30, 2000 and 1999 (Unaudited) _______________________________________________________________________________
Six Months Ended June 30, 2000 1999 ____ ____ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 889,051 $ 939,570 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 86,929 80,790 Accretion of discounts on securities (25,765) 41,205 Amortization of loan fees 0 (11,792) Provision for loan losses 250,000 56,721 Deferred income taxes 77,063 312,104 Net realized gains on securities 0 0 Deferred compensation & pension expense 0 (43,610) Changes in assets and liabilities: Accrued income (62,163) (61,318) Other assets (1,013,154) (453,966) Accrued interest payable (8,293) 22,979 Other liabilities 123,311 (153,375) __________ __________ Net cash provided by operating activities 316,979 729,308 __________ __________ CASH FLOWS FROM INVESTING ACTIVITIES: Net decrease in federal funds sold 3,850,000 1,000,000 Purchases of investment securities (6,377,490) (17,503,142) Sale of investment securities 0 493,672 Net decrease in int-bearing deposits 2,000,000 1,430,184 Maturity of investment securities 2,122,869 10,789,912 Net decrease in loans (295,966) 2,406,565 Proceeds from sale of other real estate 0 0 Purchases of properties and equipment (180,765) (387,312) __________ __________ Net cash (used) in investing activities 1,118,648 (1,770,121) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits 1,665,596 3,196,201 Net (decrease) in time deposits (3,364,504) (4,063,604) Dividends paid (281,551) (271,313) Net (decrease) fed funds purchased 0 0 Common Stock Purchased (714,421) (15,600) Common Stock Reissued 31,401 8,320 __________ _________ Net cash used in financing activities (2,663,479) (1,145,996) __________ _________ Net decrease in cash & cash equivalents (1,227,852) (2,186,809) CASH AND CASH EQUIVALENTS, BEGINNING 3,775,280 2,985,331 __________ _________ CASH AND CASH EQUIVALENTS, ENDING $ 2,547,428 $ 798,522 =========== ===========
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, 2000 and 1999 (Unaudited) _______________________________________________________________________________
2000 1999 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 2,912,797 $ 2,792,518 __________ __________ Income taxes paid $ 160,000 $ 185,395 __________ __________ SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES: Other real estate acquired in settlement of loans $ 652,554 $ 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, 2000 and for the periods ended June 30, 2000 and 1999 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, 1999, included in the Company's Annual Report for the fiscal year ended December 31, 1999. 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, Montgomery, and Roanoke, Virginia and the City of Roanoke, Virginia through four 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.
2000 1999 ____ ____ Balance at January 1 $ 1,661,521 $ 1,668,201 Provision charged to operations 250,000 56,721 Loans charged off, net of recoveries (801,276) (95,259) __________ __________ Balance at June 30 $ 1,110,245 $ 1,629,663 =========== ===========
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, 2000 and 1999 is as follows:
2000 1999 ____ ____ Commitments to extend credit $ 6,697,608 $ 4,297,274 Standby letters of credit 638,000 131,600 ___________ ___________ $ 7,335,608 $ 4,428,874 =========== ===========
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, 2000 and 1999 Net income for the six months ended June 30, 2000 was $889,501, a decrease of 5.4% compared to June 30, 1999. This decrease was a result of a credit loss provision of $250,000 in 2000 compared to $56,721 in 1999. The provision increased due to a higher amount of loans placed on nonaccrual. Management believes the provision and the resulting allowance for credit losses to be adequate. Interest income increased $129,980 from June 30, 1999 to 2000 as interest expense increased $89,007 over 1999. Net interest income for the six months ended June 30, 2000 increased by 1.5% of net interest income for the six months ended June 30, 1999. Comparison of three months ended June 30, 2000 and 1999. For the three months ended June 30, 2000, the Bank earned $363,305 in net income compared to $431,673 for the quarter ended June 30, 1999. This is due in part to an increase in the provision for credit losses of $103,790 from June 30, 1999 to June 30, 2000. Interest income was $2,762,220 for the quarter ended June 30, 2000, compared to $2,699,772 for the same period of 1999. Interest expense for the quarter ended June 30, 2000 was $1,449,690, up $51,942 from $1,397,748 for the quarter ended June 30, 1999. The provision for credit losses was $130,000 for the quarter ended June 30, 2000 and $26,721 for the quarter ended June 30, 1999. Management believes the provision and the resulting allowance for credit losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at June 30, 2000 were $156,331,481 compared to $158,140,485 at December 31, 1999, a decrease of $1,809,004. Cash and due from Banks decreased $1,227,852 during the six-month period as excess cash reserves, which had been accumulated for Y2K concerns, were eliminated. Interest-bearing deposits with banks and federal funds sold decreased collectively by $5,850,000. The company is using these funds to invest in long-term, high-yield securities. Other assets increased by $1,013,154 for the period. Foreclosures of real estate and repossessions of equipment have attributed to this increase. CAPITAL ADEQUACY Shareholder's equity amounted to $17,532,483 at June 30, 2000, a decrease of $225,114 compared to the December 31, 1999 balance of $17,757,597. The decrease was a result of the earnings for the six months offset by a decrease in the market value of securities, dividends paid, and shares of stock repurchased. 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, 2000 the Bank had a ratio of Tier 1 capital to risk-weighted assets of 14.2%, a ratio of total risk-based capital to risk-weighted assets of 15.3% and a leverage ratio of Tier 1 capital to average total assets for the quarter ended June 30, 2000 of 8.9%. 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 26, 2000. (b) The following directors were elected to serve a one-year term to the date of the 2001 Annual Meeting of Stockholders with at least 354, 660 votes: K. Venson Bolt, Joseph H. Conduff, 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 352, 345 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, 2000 By: s/Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer 12 EX-27 2 0002.txt ART. 9 FIN. DATA SCHEDULE FOR 2ND QUARTER 10QSB
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CARDINAL BANKSHARES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT JUNE 30, 2000 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. EXHIBIT 27 1 6-MOS DEC-31-2000 JUN-30-2000 2,547,428 0 3,125,000 0 36,549,889 19,886,872 18,667,000 87,730,891 1,110,245 156,331,481 138,108,756 0 690,242 0 0 0 4,942,110 12,590,373 156,331,481 3,816,509 1,652,120 190,561 5,659,190 2,904,504 2,904,504 2,754,686 0 0 1,542,107 1,127,365 889,051 0 0 889,051 1.75 1.75 7.26 740,408 161,283 0 0 1,661,521 987,587 186,311 1,110,245 1,110,245 0 0
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