-----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, TFytwZtXAAwEqn668Bziyk0NLE6TN+jvI406I+QZwJ8SMaQ55OZ5trW9Me5rOy3k K0VUH1JLY1CFbRnF1Ap2lw== 0001022759-97-000004.txt : 19970821 0001022759-97-000004.hdr.sgml : 19970821 ACCESSION NUMBER: 0001022759-97-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970818 SROS: NONE 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: 1934 Act SEC FILE NUMBER: 000-28780 FILM NUMBER: 97665426 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, 1997 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, 1997 was 465,536. 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, 1997 and December 31,1996........................................................3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1997 and 1996............................4 Consolidated Statements of Stockholders' Equity for the Periods Ended June 30, 1997 and 1996....................................5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996..........................................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 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, 1997 and December 31, 1996 ________________________________________________________________________________
June 30, December 31, 1997 1996 ____________ ____________ (Unaudited) (Audited) ASSETS Cash and due from banks $ 2,580,180 $ 2,749,552 Federal funds sold 7,700,000 500,000 Investment securities available for sale 27,288,656 30,338,456 Investment securities held to maturity; market value of $12,436,715 in 1997 and $12,366,283 in 1996 11,760,711 13,383,394 Loans, net of allowance for credit losses of $1,129,379 in 1997 and $1,002,455 in 1996 87,507,761 85,372,459 Premises and equipment 1,556,730 1,560,582 Accrued income 1,049,341 1,053,576 Other assets 1,715,735 1,463,702 ___________ ___________ Total assets $141,159,114 $136,421,721 ___________ ___________ LIABILITIES Demand deposits $ 12,070,479 $ 12,585,858 NOW deposits 8,316,374 8,572,681 Savings deposits 17,827,062 17,905,685 Large denomination time deposits 11,043,280 10,693,230 Other time deposits 73,395,021 68,666,993 ___________ ___________ Total deposits 122,652,216 118,424,447 Short-term debt 0 400,000 Long-term debt 2,400,000 2,400,000 Accrued interest payable 257,774 247,000 Other liabilities 598,139 415,355 ___________ ___________ Total liabilities 125,908,129 121,886,802 ___________ ___________ Commitments and contingencies (Note 3) STOCKHOLDERS'EQUITY: Common stock, $10 par value, authorized 5,000,000 shares, issued 465,536 shares in 1997 and 1996, respectively 4,655,360 4,655,360 Surplus 1,200,000 1,200,000 Retained earnings 9,317,986 8,585,007 Unrealized appreciation (depreciation) on investment securities available for sale, net of income taxes 77,639 94,552 ___________ ___________ Total stockholders' equity 15,250,985 14,534,919 ___________ ___________ Total liabilities and stockholders' equity $141,159,114 $136,421,721 ___________ ___________
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, 1997 and 1996 (Unaudited) ________________________________________________________________________________
Six Six Quarter Quarter Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 1997 1996 1997 1996 ____ ____ ____ ____ (Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 2,011,571 $ 1,809,133 $ 3,995,097 $ 3,647,370 Federal funds sold 71,682 34,887 81,385 95,941 Taxable investment securities 532,420 555,335 1,098,583 1,091,117 Investment securities exempt from federal tax 123,118 108,672 249,743 234,945 __________ __________ __________ __________ Total interest income 2,738,791 2,508,027 5,424,808 5,069,373 INTEREST EXPENSE ON DEPOSITS 1,401,660 1,320,181 2,739,595 2,659,312 __________ __________ __________ __________ Net interest income 1,337,131 1,187,646 2,685,213 2,410,061 PROVISION FOR CREDIT LOSSES 75,000 75,000 150,000 175,000 __________ __________ __________ __________ Net interest income after provision for credit losses 1,262,131 1,112,846 2,535,213 2,235,061 OTHER INCOME: Service charges on deposit accounts 39,605 30,282 71,507 57,311 Other service charges and fees 6,527 2,160 13,456 4,522 Securities gains - 24,991 6,808 32,491 Other income 69,941 56,736 117,692 120,666 __________ __________ __________ __________ Total other income 116,073 114,169 209,463 214,990 OTHER EXPENSE: Salaries and employee benefits 368,903 441,994 745,105 849,521 Occupancy expense 26,742 27,962 49,532 56,056 Equipment expense 51,675 42,476 109,954 85,596 Other expense 219,834 191,148 504,683 377,084 __________ __________ __________ __________ Total other expense 667,154 703,580 1,409,274 1,368,257 __________ __________ __________ __________ Income before income taxes 711,050 523,435 1,335,402 1,081,794 Income tax expense 197,850 145,113 365,000 306,132 __________ __________ __________ __________ Net income $ 513,200 $ 378,322 $ 970,402 $ 775,662 __________ __________ __________ __________ NET INCOME PER SHARE $ 1.10 $ 0.81 $ 2.08 $ 1.67 __________ __________ __________ __________
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, 1997 and June 30, 1996 (Unaudited) ________________________________________________________________________________
UNREALIZED TOTAL APPRECIATION STOCK- COMMON RETAINED (DEPRECIATION) HOLDERS' STOCK SURPLUS EARNINGS SECURITIES EQUITY __________ _______ _________ _____________ ________ January 1, 1996 $4,655,360 $1,200,000 $ 7,481,589 $ 294,529 $13,631,478 Net income 775,662 775,662 Change in market value of investment securities available for sale, net of income taxes (550,812) (550,812) _________ _________ __________ ________ __________ June 30, 1996 $4,655,360 $1,200,000 $ 8,257,251 $(256,283) $13,856,328 _________ _________ __________ ________ __________ January 1, 1997 $4,655,360 $1,200,000 $ 8,585,007 $ 94,552 $14,534,919 Net income 970,402 970,402 Change in market value of investment securities available for sale, net of income taxes (16,913) (16,913) Dividends paid (237,423) (237,423) _________ _________ __________ ________ __________ June 30, 1997 $4,655,360 $1,200,000 $ 9,317,986 $ 77,639 $ 15,250,985 _________ _________ __________ ________ __________
See Notes to Consolidated Financial Statements 5 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the six months ended June 30, 1997 and 1996 (Unaudited) _______________________________________________________________________________
1997 1996 ____ ____ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 970,402 $ 775,662 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 87,920 79,352 Accretion of discounts on securities, net of amortization of premiums (29,777) (33,958) Amortization of loan fees (54,343) (15,493) Provision for credit losses 150,000 175,000 Deferred income taxes 103,132 207,236 Net realized gains on securities (6,788) (32,991) Net realized gains on sale of ORE - (9,696) Deferred compensation & pension expense - 31,806 Changes in assets and liabilities: Accrued income 4,235 6,374 Other assets (369,645) 277,636 Accrued interest payable 10,774 9,118 Other liabilities 182,784 (76,743) __________ ___________ Net cash provided by operating activities 1,048,694 1,393,303 __________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) in federal funds sold (7,200,000) 550,000 Purchases of securities (871,444) (9,809,182) Sale of securities 1,043,761 991,475 Maturities of securities 4,504,317 11,223,138 Net increase in loans (2,230,958) (3,580,177) Proceeds from sale of other real estate 29,978 91,249 Purchases of properties and equipment (84,067) (125,656) __________ __________ Net cash used in investing activities (4,808,413) (659,153) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits (850,309) (1,135,038) Net increase (decrease) in time deposits 5,078,079 496,906 Dividends paid (237,423) - Principal paid on short-term debt (400,000) __________ __________ Net cash provided (used) by financing activities 3,590,347 (638,132) __________ __________ Net decrease in cash and cash equivalents (169,372) 96,018 CASH AND CASH EQUIVALENTS, BEGINNING 2,749,552 1,907,215 __________ __________ CASH AND CASH EQUIVALENTS, ENDING $ 2,580,180 $ 2,003,233 __________ __________
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, 1997 and 1996 (Unaudited) _______________________________________________________________________________
1997 1996 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 2,728,621 $ 2,650,194 __________ __________ Income taxes paid $ 360,399 $ 288,477 __________ __________ 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, 1997 and for the periods ended June 30, 1997 and 1996 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, 1996, included in the Company's Annual Report for the fiscal year ended December 31, 1996. 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.
1997 1996 ____ ____ Balance at January 1 $ 1,002,455 $ 1,134,182 Provision charged to operations 150,000 175,000 Loans charged off, net of recoveries (23,076) (427,073) __________ __________ Balance at March 31 $ 1,129,379 $ 882,109
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, 1997 and 1996 is as follows:
1997 1996 ____ ____ Commitments to extend credit $ 3,988,684 $ 4,767,635 Standby letters of credit 187,700 396,500 __________ __________ $ 4,176,384 $ 5,164,135
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the quarter ended June 30, 1997, the Bank earned $513,200 in net income compared to $378,322 for the quarter ended June 30, 1996. The in- crease of $134,878 was due primarily to an increase in net interest income. Interest income was $2,738,791 for the quarter ended June 30, 1997, compared to $2,508,027 for the same period of 1996. The quarterly increase was due mainly to an increase of $4.5 million in average earning assets for the quarter ended June 30, 1997, as compared to the quarter ended June 30, 1996. Interest expense for the quarter ended June 30, 1997 was $1,401,660, up $81,479 from $1,320,181 for the quarter ended June 30, 1996. The increase was due primarily to an increase in interest bearing deposits when compared to the quarter ended June 30, 1996. The provision for credit losses was $75,000 for the quarters ended June 30, 1997 and 1996. Management believes the provision and the resulting allowance for credit losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at June 30, 1997 were $141,159,114 compared to $136,421,721 at December 31, 1996. Net loans have increased by $2.1 million due to solid loan demand. The loans were funded by an increase in deposits. CAPITAL ADEQUACY Shareholder's equity amounted to $15,250,985 at June 30, 1997, an increase of $716,066 over the December 31, 1996 balance of $14,534,919. 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 $237,413 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, 1997 the Bank had a ratio of Tier 1 capital to risk-weighted assets of 13.85%, a ratio of total risk-based capital to risk-weighted assets of 15.01% and a leverage ratio of Tier 1 capital to average total assets for the quarter ended June 30, 1997 of 8.90%. 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. 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, 1997 By: s/Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer 10 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, 1997 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 6-MOS DEC-31-1997 JUN-30-1997 2,580,180 0 7,700,000 0 27,288,656 11,760,711 12,436,715 88,637,140 (1,129,379) 141,159,114 122,652,216 0 855,913 2,400,000 0 0 4,655,360 10,595,625 141,159,114 3,995,097 1,348,326 81,385 5,424,808 2,739,595 0 2,685,213 150,000 7 1,409,274 1,335,402 1,335,402 0 0 970,402 2.08 2.08 3.98 0 300,000 0 0 1,002,455 23,076 0 1,129,379 1,129,379 0 0
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