-----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, U0rSxngAeRV44oRBV3ntA1DqW0HA6hYEr3P5an2JzKRi4bJGGzpGHNP1JMW0YUnv Ofja39nBmRj54kLosUrxng== 0000950168-99-002243.txt : 19990817 0000950168-99-002243.hdr.sgml : 19990817 ACCESSION NUMBER: 0000950168-99-002243 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 99690807 BUSINESS ADDRESS: STREET 1: P O BOX 215 CITY: FLOYD STATE: VA ZIP: 24091 BUSINESS PHONE: 5407454191 10QSB 1 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, 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. -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 June 30, 1999 was 511,771. 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, 1999 and December 31,1998........................................................3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1999 and 1998............................4 Consolidated Statements of Stockholders' Equity for the Periods Ended June 30, 1999 and 1998....................................5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998..........................................6-7 Notes to Consolidated Financial Statements.............................8-9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................................9-10 PART II. OTHER INFORMATION.............................................10-11 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, 1999 and December 31, 1998 - --------------------------------------------------------------------------------
June 30, December 31, 1999 1998 ------------ ------------ (Unaudited) (Audited) ASSETS Cash and due from banks $ 798,522 $ 2,985,331 ------------ ------------ Interest-bearing deposits with banks 5,669,816 7,100,000 Federal funds sold 10,825,000 11,825,000 Investment securities available for sale 29,553,913 25,981,443 Investment securities held to maturity 17,035,910 15,347,979 Loans, net of allowance for credit losses of $1,629,663 in 1999 and $1,668,201 in 1998 83,358,012 85,809,506 Property and equipment, net 2,480,215 2,173,693 Accrued income 1,045,775 984,457 Other assets 1,656,260 1,202,294 ------------ ------------ Total assets $152,423,423 $153,409,703 ------------ ------------ LIABILITIES Demand deposits $ 19,185,525 $ 15,553,868 Interest-bearing deposits 9,697,461 9,991,178 Savings deposits 18,334,438 18,476,177 Large denomination time deposits 15,786,512 15,666,927 Other time deposits 71,339,718 75,522,910 ------------ ------------ Total deposits 134,343,657 135,211,060 Federal funds purchased 0 0 Other borrowed funds 0 0 Accrued interest payable 263,688 240,709 Other liabilities 439,824 636,809 ------------ ------------ Total liabilities 135,047,169 136,088,578 ------------ ------------ Commitments and contingencies (Note 3) STOCKHOLDERS'EQUITY: Common stock, $10 par value, authorized 5,000,000 shares, issued 511,771 shares in 1999 and 511,911 in 1998 5,117,710 5,119,110 Surplus 2,919,270 2,925,150 Retained earnings 9,791,990 9,123,733 Unrealized appreciation (depreciation) on investment securities available for sale (452,716) 153,132 ------------ ------------ Total stockholders' equity 17,376,254 17,321,125 ------------ ------------ Total liabilities and stockholders' equity $152,423,423 $153,409,703 ------------ ------------
See Notes to Consolidated Financial Statements 3 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the quarter and six months ended June 30, 1999 and 1999 (Unaudited) - --------------------------------------------------------------------------------
Six Six Quarter Quarter Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 1999 1998 1999 1998 (Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 1,866,961 $ 1,983,332 $ 3,852,638 $ 4,023,885 Federal funds sold 112,402 111,929 234,343 193,982 Taxable investment securities 707,008 573,269 1,414,960 1,170,887 Investment securities exempt from federal tax 13,401 150,897 27,269 291,111 ----------- ----------- ----------- ----------- Total interest income 2,699,772 2,819,427 5,529,210 5,679,865 INTEREST EXPENSE ON DEPOSITS: Deposits 1,397,748 1,444,072 2,815,497 2,903,378 Federal funds purchased 0 0 0 0 Other borrowed funds 0 0 0 0 ----------- ----------- ----------- ----------- Total interest expense 1,397,748 1,444,072 2,815,497 2,903,378 ----------- ----------- ----------- ----------- Net interest income 1,302,024 1,375,355 2,713,713 2,766,487 PROVISION FOR CREDIT LOSSES 26,721 60,000 56,721 135,000 ----------- ----------- ----------- ----------- Net interest income after provision for loan loss 1,275,303 1,315,355 2,656,992 2,641,487 NON INTEREST INCOME: Service charges on deposit accounts 46,931 36,949 83,558 69,989 Net realized gains on sales of Securities 0 7,774 0 19,583 Other income 43,403 22,970 89,961 65,837 ----------- ----------- ----------- ----------- Total non interest income 90,334 67,693 173,519 155,409 NON INTEREST EXPENSE: Salaries and employee benefits 566,903 444,083 1,033,290 868,903 Occupancy expense 33,834 29,205 71,780 59,892 Equipment expense 67,652 64,971 125,690 120,169 Other expense 132,691 183,601 348,628 356,829 ----------- ----------- ----------- ----------- Total non interest expense 801,080 721,810 1,579,388 1,405,793 Income before income taxes 564,557 661,238 1,251,123 1,391,103 ----------- ----------- ----------- ----------- Income tax expense 126,158 178,098 311,553 383,024 ----------- ----------- ----------- ----------- Net income $ 431,673 $ 483,140 $ 939,570 $ 1,008,079 BASIC EARNINGS PER SHARE $ 0.84 $ 0.94 $ 1.84 $ 1.97
See Notes to Consolidated Financial Statements 4 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders' Equity For the six months ended June 30, 1999 and June 30, 1998 (Unaudited) - --------------------------------------------------------------------------------
ACCUMULATED TOTAL OTHER STOCK- COMMON RETAINED COMPREHENSIVE HOLDERS' STOCK SURPLUS EARNINGS INCOME(LOSS) EQUITY ---------- ---------- ----------- --------- ----------- January 1, 1998 $5,119,110 $2,925,150 $ 7,727,506 $ 212,385 $15,984,151 Net income 1,938,852 1,938,852 Change in market value of investment securities available for sale, net of income taxes (31,938) (31,938) Reclassification adjustment (27,315) (27,315) ---------- 1,879,599 Dividends paid ($1.06 per share) (542,625) (542,625) Common stock purchased (11,000) (11,000) Common stock reissued 11,000 11,000 ---------- ---------- ----------- --------- ----------- December 31, 1998 $5,119,110 $2,925,150 $ 9,123,733 $ 153,132 $17,321,125 ---------- ---------- ----------- --------- ----------- Net income 939,570 939,570 Net change in unrealized Depreciation on investment Securities available for Sale (605,848) (605,848) ---------- ---------- ----------- --------- ----------- Total Comprehensive Income 939,570 (605,848) 333,722 Dividends paid ($.53 per share) (271,313) (271,313) Common stock purchased (15,600) (15,600) Common stock reissued 8,320 8,320 ---------- ---------- ----------- --------- ----------- June 30, 1999 $5,117,710 $2,919,270 $ 9,791,990 $(452,716)$ 17,376,254 ---------- ---------- ----------- --------- -----------
See Notes to Consolidated Financial Statements 5 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the six months ended June 30, 1999 and 1998 (Unaudited) - --------------------------------------------------------------------------------
Six Months Ended June 30, 1999 1998 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 939,570 $ 1,008,079 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 80,790 71,513 Accretion of discounts on securities (16,927) 16,724 Amortization of loan fees (11,792) (51,216) Provision for loan losses 56,721 135,000 Deferred income taxes 0 0 Net realized gains on securities 0 (19,583) Deferred compensation & pension expense 43,610 32,692 Changes in assets and liabilities: Accrued income (61,318) (52,740) Other assets (453,960) (208,521) Accrued interest payable 22,979 6,297 Other liabilities (76,508) 236,567 ----------- ----------- Net cash provided by operating activities 671,175 1,174,812 CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) in federal funds sold 1,000,000 (4,345,797) Purchases of investment securities (18,774,545) (7,457,125) Sale of investment securities 0 12,125 Net decrease in int-bearing deposits 1,430,184 0 Maturity of investment securities 6,615,120 9,799,762 Net decrease in loans 2,406,505 3,525,049 Proceeds from sale of other real estate 0 51,772 Purchases of properties and equipment (387,312) (449,169) ----------- ----------- Net cash (used) in investing activities (1,711,988) 1,136,617 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits 3,196,204 834,409 Net (decrease) in time deposits (4,063,607) (2,293,500) Dividends paid (271,313) (266,195) Net (decrease) fed funds purchased (7,280) 0 ----------- ----------- Net cash used in financing activities (1,145,996) (1,725,286) ----------- ----------- Net decrease in cash & cash equivalents (2,186,809) 586,143 CASH AND CASH EQUIVALENTS, BEGINNING 2,985,331 1,941,494 ----------- ----------- CASH AND CASH EQUIVALENTS, ENDING $ 798,522 $ 2,527,637 ----------- -----------
See Notes to Consolidated Financial Statements 6 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows, continued For the six months ended June 30, 1999 and 1998 (Unaudited) - --------------------------------------------------------------------------------
1999 1998 ----------- ----------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 2,792,518 $ 2,897,081 ----------- ----------- Income taxes paid $ 185,395 $ 398,309 ----------- ----------- SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES: Other real estate acquired in settlement of loans $ - $ -
See Notes to Consolidated Financial Statements 7 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, 1999 and for the periods ended June 30, 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. 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 two 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.
1999 1998 ----------- ----------- Balance at January 1 $ 1,668,201 $ 1,452,126 Provision charged to operations 56,721 135,000 Loans charged off, net of recoveries (95,259) 1,572 ----------- ----------- Balance at June 30 $ 1,629,663 $ 1,588,698
8 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, 1999 and 1998 is as follows:
1999 1998 ----------- ----------- Commitments to extend credit $ 4,297,274 $ 4,352,232 Standby letters of credit 131,600 250,000 ----------- ----------- $ 4,428,874 $ 4,602,232
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the quarter ended June 30, 1999, the Bank earned $431,673 in net income compared to $483,140 for the quarter ended June 30, 1998. The decrease of $51,467 was due primarily to a decrease in net interest income. Interest income was $2,699,772 for the quarter ended June 30, 1999, compared to $2,819,427 for the same period of 1998. The quarterly decrease was due mainly to a decrease in yields on average earning assets. Interest expense for the quarter ended June 30, 1999 was $1,275,302, down $40,052 from $1,315,355 for the quarter ended June 30, 1998. The decrease was due to a decrease in interest bearing deposits and lower interest rates when compared to the quarter ended June 30, 1998. The provision for credit losses was $26,721 for the quarter ended June 30, 1999 and $60,000 for the quarter ended June 30, 1998. Management believes the provision and the resulting allowance for credit losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at June 30, 1999 were $152,423,423 compared to $153,409,703 at December 31, 1998. Net loans have decreased by $2.4 million. CAPITAL ADEQUACY Shareholder's equity amounted to $17,376,254 at June 30, 1999, an increase of $55,129 over the December 31, 1998 balance of $17,321,125. The increase was a result of the earnings for the six months offset by a decrease in the market value of securities that are classified as available for sale and the payment of $271,313 in dividends. 9 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, 1999 the Bank had a ratio of Tier 1 capital to risk-weighted assets of 14.66%, a ratio of total risk-based capital to risk-weighted assets of 15.91% and a leverage ratio of Tier 1 capital to average total assets for the quarter ended June 30, 1999 of 8.84%. 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 None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 10 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 12, 1999 By: s/Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer 11 EX-27 2 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, 1999 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 6-MOS DEC-31-1999 JUN-30-1999 798,522 5,669,816 10,825,000 0 29,624,198 16,755,504 16,658,502 84,987,675 (1,629,663) 152,423,423 134,343,657 263,688 439,824 0 0 0 5,117,710 9,791,990 152,423,423 3,852,638 1,676,572 0 5,529,210 2,815,497 0 2,713,713 56,721 0 1,579,388 1,251,123 939,571 0 0 939,571 1.84 1.84 7.37 0 300,000 0 0 1,643,202 72,360 2,154 1,629,663 1,629,663 0 0
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