-----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, WAZvfUMs1aucKLmJihnnUHcCImHYnWpSQwEXk6Jn1SrQYLNQiUDr6X5RSRBBcOu7 d6OGd7h6ZE5q6WLu/W5yaA== 0000950168-99-001530.txt : 19990517 0000950168-99-001530.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950168-99-001530 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: SEC FILE NUMBER: 000-28780 FILM NUMBER: 99622762 BUSINESS ADDRESS: STREET 1: P O BOX 215 CITY: FLOYD STATE: VA ZIP: 24091 BUSINESS PHONE: 5407454191 10QSB 1 CARDINAL BANKSHARES CORPORATION 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 March 31, 1999. 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. 33-69326 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, Virginia 24091 (Address of principal executive offices) (540) 745-4191 (Issuer's telephone number, including area code) ----------------------------------------------------------------- (Former name, former address, and former fiscal year, if changed since last report) 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: 511,911 shares of common stock, $10.00 par value per share (the "Common Stock"), issued and outstanding as of May 10, 1999. Transitional Small Business Disclosure Format (check one): Yes No X ---- ---- There are no Exhibits CNB Holdings, Inc. Form 10-QSB INDEX - ------------------------------------------------------------------------------- PART 1. FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS The financial statements of Cardinal Bankshares Corporation (the "Company") are set forth in the following pages. Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 ...........................................................3 Consolidated Statements of Operations for the Three Months Ended March 31, 1999 and 1998...............................................4 Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 1999 and the Year Ended December 31, 1998......................................................5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998...............................................6 Notes to Consolidated Financial Statements.....................................7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................8 PART II. OTHER INFORMATION Item 1. Legal Proceedings......................................................9 Item 2. Changes in Securities..................................................9 Item 3. Defaults Upon Senior Securities........................................9 Item 4. Submission of Matters to a Vote of Security Holders................... 9 Item 5. Other Information......................................................9 Item 6. Exhibits and Reports on Form 8-K...................................... 9 SIGNATURES....................................................................10 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 MARCH 31, 1999 AND DECEMBER 31, 1998 - -------------------------------------------------------------------------------- MARCH 31, DECEMBER 31, 1999 1998 ------ -------- ASSETS Cash and due from banks $ 2,382,697 $ 2,985,331 Interest - bearing deposits with banks 5,220,148 7,100,000 Federal funds sold 11,500,000 11,825,000 Investment securities available for sale 27,727,358 25,981,443 Investment securities held to maturity 17,342,618 15,347,979 Loans, net of allowance for loan losses of $1,696,639 in 1999 and $1,668,201 in 1998 83,105,396 85,809,506 Property and equipment, net 2,345,729 2,173,693 Accrued income 1,067,695 984,457 Other assets 1,353,522 1,202,294 ------------ ------------ Total assets $152,045,163 $153,409,703 ============ ============ LIABILITIES Demand deposits $ 14,756,313 $ 15,553,868 Interest-bearing demand deposits 10,158,473 9,991,178 Savings deposits 14,169,590 18,476,177 Large denomination time deposits 18,152,311 15,666,927 Other time deposits 76,125,523 75,522,910 ------------ ------------ Total deposits 133,362,210 135,211,060 Federal funds purchased -- -- Other borrowed funds -- -- Accrued interest payable 279,654 240,709 Other liabilities 662,916 636,809 ------------ ------------ Total liabilities 134,304,780 136,088,578 ------------ ------------ Commitments and contingencies STOCKHOLDERS' EQUITY: Common stock, $10 par value; 5,000,000 shares authorized; 511,911 shares outstanding in 1999 and 1998, respectively 5,119,110 5,119,110 Surplus 2,925,150 2,925,150 Retained earnings 9,631,630 9,123,733 Unrealized depreciation on investment securities available for sale 64,493 153,132 ------------ ------------ Total stockholders' equity 17,740,383 17,321,125 ------------ ------------ Total liabilities and stockholders' equity $152,045,163 $153,409,703 ============ ============ SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1999 AND 1998 - --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, ------------------------- 1999 1998 ---------- ---------- INTEREST INCOME: Loans and fees on loans $1,985,677 $2,040,553 Federal funds sold 121,941 82,053 Taxable investment securities 707,952 597,618 Investment securities exempt from federal tax 13,868 140,214 ---------- ---------- Total interest income 2,829,438 2,860,438 ---------- ---------- INTEREST EXPENSE: Deposits 1,417,749 1,459,306 Federal funds purchased -- -- Other borrowed funds -- -- Total interest expense 1,417,749 1,459,306 ---------- ---------- Net interest income 1,411,689 1,401,132 PROVISION FOR LOAN LOSSES 30,000 75,000 Net interest income after provision for loan losses 1,381,689 1,326,132 ---------- ---------- NON INTEREST INCOME: Service charges on deposit accounts 38,627 33,040 Net realized gains on sales of securities -- -- Other income 44,558 54,676 ---------- ---------- Total non interest income 83,185 87,716 ---------- ---------- NON INTEREST EXPENSE: Salaries and employee benefits 466,387 424,870 Occupancy expense 37,946 30,687 Equipment expense 58,038 55,198 Other expense 215,937 173,228 ---------- ---------- Total non interest expense 778,308 683,983 ---------- ---------- Income before income taxes 686,566 729,865 Income tax expense 185,395 204,926 ---------- ---------- Net Income (loss) $ 507,897 $ 524,939 ========== ========== BASIC EARNINGS PER SHARE $ .99 $ 1.03 ========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING 511,911 511,911 ========== ==========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEAR ENDED DECEMBER 31, 1998 AND THE THREE MONTHS ENDED MARCH 31, 1999 - --------------------------------------------------------------------------------
ACCUMULATED COMMON STOCK RETAINED OTHER ------------ EARNINGS COMPREHENSIVE SHARES AMOUNT SURPLUS (DEFICIT) INCOME (LOSS) TOTAL ------ ------ ------- --------- ------------- ----- DECEMBER 31, 1997 511,911 $ 5,119,110 $ 2,925,150 $ 7,727,506 $ 212,385 $ 15,984,151 ------------ ------------ ------------ ------------ ------------ ------------ COMPREHENSIVE INCOME Net income -- -- -- 1,938,852 -- 1,938,852 Net change in unrealized depreciation on investment securities available for sale, -- -- -- -- 10,910 10,910 net of taxes of $ (30,525) -- -- -- -- (31,938) (31,938) Reclassification adjustment -- -- -- -- (27,315) (27,315) ------------ TOTAL COMPREHENSIVE INCOME 1,879,599 Dividends paid ($1.06 per share) -- -- -- (542,625) -- (542,625) Common stock purchased (2,500) -- -- (11,000) -- (13,500) Common stock reissued 2,500 -- -- 11,000 -- 13,500 ------------ ------------ ------------ ------------ ------------ ------------ DECEMBER 31, 1998 511,911 $ 5,119,110 $ 2,925,150 $ 9,123,733 $ 153,132 $ 17,321,125 COMPREHENSIVE INCOME Net income -- -- -- 507,897 -- 507,897 Net change in unrealized depreciation on investment securities available for sale -- -- -- -- (88,639) (88,639) ------------ TOTAL COMPREHENSIVE INCOME 419,258 ------------ ------------ ------------ ------------ ------------ ------------ MARCH 31, 1999 511,911 $ 5,119,110 $ 2,925,150 $ 9,631,630 $ 64,493 $ 17,740,383 ============ ============ ============ ============ ============ ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1999 AND 1998 - --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, -------------------------------- 1999 1998 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 507,897 $ 524,939 Adjustments to reconcile net income (loss) to net cash used by operations: Depreciation and amortization 38,895 34,833 Accretion of discount on securities, net 8,684 (2,418) Amortization of loan fees (11,792) (24,811) Provision for loan losses 30,000 75,000 Deferred income taxes - (3,357) Net realized gains on securities - (11,809) Deferred compensation and pension expense 21,805 16,346 Changes in assets and liabilities: Accrued income (83,238) 77,113 Other assets (151,228) 12,505 Accrued interest payable 38,945 12,096 Other liabilities 4,302 35,967 ------------ ------------ Net cash flows from operating activities 404,270 762,404 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease in federal funds sold 325,000 (6,175,000) Purchases of investment securities (10,450,997) (4,333,424) Net decrease in interest - bearing deposits 1,879,852 - Maturity of investment securities 6,613,120 5,526,262 Net (increase) decrease in loans 2,685,902 4,438,382 Purchases of property and equipment (210,931) (265,762) ------------ ------------ Net cash provided by (used in) investing activities 841,946 (799,542) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits (4,936,847) 1,125,853 Net increase (decrease) in time deposits 3,087,997 (789,604) Net increase (decrease) in federal funds purchased - - ------------ ------------ Net cash provided by (used in) financing activities (1,848,850) 336,249 ------------ ------------ Net increase (decrease) in cash and cash equivalents (602,634) 299,110 CASH AND CASH EQUIVALENTS, BEGINNING 2,985,331 1,941,494 ------------ ------------ CASH AND CASH EQUIVALENTS, ENDING $ 2,382,697 $ 2,240,604 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ 1,378,804 $ 1,431,210 ============ ============ Income taxes paid $ 185,395 $ 168,069 ============ ============ SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: Other real estate acquired in settlement of loans $ - $ - ============ ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION 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 June 30, 1996. The Bank of Floyd and its wholly owned subsidiary, FBC, Inc., are incorporated and operate 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. The Bank serves the counties of Floyd, Carroll, Montgomery and Roanoke, Virginia and the City of Roanoke, Virginia, through four banking offices. FBC, Inc.'s assets and operations consist primarily of annuity sales and a minority interest in a title insurance company. The accounting and reporting policies of the Company, the Bank and FBC, Inc. follow generally accepted accounting principles and general practices within the financial services industry. Following is a summary of the more significant policies. BASIS OF PRESENTATION The consolidated financial statements as of March 31, 1999 and for the periods ended March 31, 1999 and 1998 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, 1998, included in the Company's Annual Report for the fiscal year ended December 31, 1998. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. ALLOWANCES FOR CREDIT LOSSES The following is an analysis of the allowance for credit losses for the three months ended March 31. 1999 1998 --------------- ------------- Balance at January 1 $ 1,668,201 $ 1,452,126 Provision charged to operations 30,000 75,000 Loans charged off, net of recoveries (1,562) - -------------- ------------- Balance at March 31 $ 1,696,639 $ 1,527,126 ============= ============= - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 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 March 31, 1999 and 1998 is as follows: 1999 1998 ------------- ------------ Commitments to extend credit $ 7,097,000 $ 7,348,000 Standby letters of credit 132,000 307,000 ------------ ----------- $ 7,229,000 $ 7,655,000 ============= ============= ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the quarter ended March 31, 1999, the Bank earned $507,897 in net income compared to $524,939 for the quarter ended March 31, 1998. The decrease of $17,042 was due primarily to a decrease in net interest income. Interest income was $2,829,438 for the quarter ended March 31, 1999, compared to $2,860,438 for the same period of 1998. The quarterly decrease was due mainly to a decrease of $1.8 million in average earning assets for the quarter ended March 31, 1999, as compared to the quarter ended March 31, 1998. Interest expense for the quarter ended March 31, 1999 was $1,417,749, down $41,557 from $1,459,306 for the quarter ended March 31, 1998. The decrease was due primarily to a decrease in interest bearing deposits when compared to the quarter ended March 31, 1998. The provision for credit losses was $30,000 for the quarter ended March 31, 1999 and $75,000 for the quarter ended March 31, 1998. Management believes the provision and the resulting allowance for credit losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at March 31, 1999 were $152,045,163 compared to $153,409,703 at December 31, 1998. Net loans have decreased by $2.5 million. CAPITAL ADEQUACY Shareholder's equity amounted to $17,740,383 at March 31, 1999, an increase of $419,258 over the December 31, 1998 balance of $17,321,125. The increase was a result of the earnings for the three months offset by a decrease in the market value of securities that are classified as available for sale. 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 March 31, 1999 the Bank had a ratio of Tier 1 capital to risk-weighted assets of 14.51%, a ratio of total risk-based capital to risk-weighted assets of 15.76% and a leverage ratio of Tier 1 capital to average total assets for the quarter ended March 31, 1999 of 8.61%. - -------------------------------------------------------------------------------- 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 At the Company's Annual Meeting of Shareholders held on April 28, 1999, the shareholders of the Company voted upon the following matters with the following results: (1) The election of the following persons as directors of the Company to serve until the next annual meeting following their election and therefore until their successors have been elected and have qualified: Name Votes for Votes withheld K. Venson Bolt 393,586 714 Joseph H. Conduff 383,836 714 William R. Gardner, Jr. 393,586 714 C. W. Harman 393,586 714 Kevin D. Mitchell 393,586 714 Ronald Leon Moore 393,586 714 Dorsey H. Thompson 393,586 714 ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 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: May 12, 1999 By: Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer EX-27 2 FDS --
9 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 2,382,697 5,220,148 11,500,000 0 27,727,358 17,342,618 16,907,465 83,105,396 1,696,639 152,045,163 133,362,210 0 942,570 0 0 0 5,119,110 12,621,273 152,045,163 1,985,677 721,820 121,941 2,829,438 1,417,749 1,417,749 1,411,689 30,000 0 778,308 686,566 185,395 0 0 507,897 .99 .99 3.80 290,547 841,538 0 0 1,668,201 1,562 0 1,696,639 1,696,639 0 0
-----END PRIVACY-ENHANCED MESSAGE-----