-----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, QamhxoIdcr+M0JNz5mSvziQJELXOzuHruMaMrTY8tqpWk1b27qzC9la9EFXdn9S9 eEzrOJt9zZ/nKatGM5eUeg== 0001046249-98-000012.txt : 19980515 0001046249-98-000012.hdr.sgml : 19980515 ACCESSION NUMBER: 0001046249-98-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE 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: 98621235 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 March 31, 1998 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 March 31, 1998 was 511,911. 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 March 31, 1998 and December 31,1997........................................................3 Consolidated Statements of Operations for the Three Months Ended March 31, 1998 and 1997...........................................4 Consolidated Statements of Stockholders' Equity for the Periods Ended March 31, 1998 and 1997...................................5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1998 and 1997.........................................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 March 31, 1998 and December 31, 1997 ________________________________________________________________________________
March 31, December 31, 1998 1997 ____________ ____________ (Unaudited) (Audited) ASSETS Cash and due from banks $ 2,240,604 $ 1,941,494 Interest-bearing deposits with banks 5,000,000 5,000,000 Federal funds sold 10,000,000 3,825,000 Investment securities available for sale 30,804,860 31,663,068 Investment securities held to maturity; market value of $13,275,298 in 1998 and $13,614,488 in 1997 13,090,347 13,430,624 Loans, net of allowance for credit losses of $1,541,968 in 1998 and $1,452,126 in 1997 (Note 2) 80,819,527 85,304,739 Premises and equipment 1,918,789 1,687,859 Accrued income 1,015,950 1,093,063 Other assets 1,117,321 1,126,470 ___________ ___________ Total assets $146,007,398 $145,072,317 ___________ ___________ LIABILITIES Demand deposits $ 12,856,666 $ 12,229,167 NOW deposits 8,787,935 8,923,777 Savings deposits 18,141,374 17,507,178 Large denomination time deposits 13,221,747 15,120,658 Other time deposits 75,517,253 74,407,946 ___________ ___________ Total deposits 128,524,975 128,188,726 Short-term debt 0 0 Long-term debt 0 0 Accrued interest payable 297,128 269,032 Other liabilities 682,722 630,408 ___________ ___________ Total liabilities 129,504,825 129,088,166 ___________ ___________ Commitments and contingencies (Note 3) STOCKHOLDERS'EQUITY: Common stock, $10 par value, authorized 5,000,000 shares, issued 511,911 shares in 1998 and 1997 5,119,110 5,119,110 Surplus 2,925,150 2,925,150 Retained earnings 8,252,445 7,727,506 Unrealized appreciation (depreciation) on investment securities available for sale, net of income taxes 205,868 212,385 ___________ ___________ Total stockholders' equity 16,502,573 15,984,151 ___________ ___________ Total liabilities and stockholders' equity $146,007,398 $145,072,317
___________ ___________ See Notes to Consolidated Financial Statements 3 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the three months ended March 31, 1998 and 1997 (Unaudited) ________________________________________________________________________________
1998 1997 ____ ____ INTEREST INCOME: Loans and fees on loans $ 2,040,553 $ 1,983,526 Federal funds sold 82,053 9,703 Taxable investment securities 597,618 566,163 Investment securities exempt from federal tax 140,214 126,625 __________ __________ Total interest income 2,860,438 2,686,017 INTEREST EXPENSE ON DEPOSITS 1,459,306 1,337,935 __________ __________ Net interest income 1,401,132 1,348,082 PROVISION FOR CREDIT LOSSES 75,000 75,000 __________ __________ Net interest income after provision for credit losses 1,326,132 1,273,082 OTHER INCOME: Service charges on deposit accounts 33,040 31,902 Other service charges and fees 5,833 6,929 Securities gains 11,809 6,808 Other real estate owned gains - - Other income 37,034 47,751 __________ __________ Total other income 87,716 93,390 OTHER EXPENSE: Salaries and employee benefits 424,870 376,202 Occupancy expense 30,687 22,790 Equipment expense 55,198 58,279 Other expense 173,228 284,849 __________ __________ Total other expense 683,983 742,120 __________ __________ Income before income taxes 729,865 624,352 Income tax expense 204,926 167,150 __________ __________ Net income $ 524,939 $ 457,202 __________ __________ BASIC AND DILUTED EARNINGS PER SHARE $ 1.03 $ 0.89 __________ __________
See Notes to Consolidated Financial Statements 4 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders' Equity For the three months ended March 31, 1998 and March 31, 1997 (Unaudited) ________________________________________________________________________________
UNREALIZED TOTAL APPRECIATION STOCK- COMMON RETAINED (DEPRECIATION) HOLDERS' STOCK SURPLUS EARNINGS SECURITIES EQUITY __________ _______ _________ _____________ ________ January 1, 1997 $4,655,360 $1,200,000 $ 8,585,007 $ 94,552 $14,534,919 Comprehensive income Net income 457,202 457,202 Net change in unrealized appreciation on investment securities available for sale, net of income taxes (217,109) (217,109) __________ Total comprehensive income 240,093 _________ _________ __________ ________ __________ March 31, 1997 $4,655,360 $1,200,000 $ 9,042,209 $(122,557) $14,775,012 _________ _________ __________ ________ __________ January 1, 1998 $5,119,110 $2,925,150 $ 7,727,506 $ 212,385 $15,984,151 Comprehensive income Net income 524,939 524,939 Net change in unrealized appreciation on investment securities available for sale, net of income taxes (6,517) (6,517) __________ Total comprehensive income 518,422 _________ _________ __________ ________ __________ March 31, 1998 $5,119,110 $2,925,150 $ 8,252,445 $ 205,868 $16,502,573 _________ _________ __________ ________ __________
See Notes to Consolidated Financial Statements 5 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the three months ended March 31, 1998 and 1997 (Unaudited) _______________________________________________________________________________
1998 1997 ____ ____ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 524,939 $ 457,202 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 34,833 43,891 Accretion of discounts on securities, net of amortization of premiums (2,418) (24,967) Amortization of loan fees (24,811) (25,000) Provision for credit losses 75,000 75,000 Deferred income taxes (3,357) - Net realized gains on securities (11,809) (5,039) Net realized gains on sale of ORE - - Deferred compensation & pension expense 16,346 9,356 Changes in assets and liabilities: Accrued income 77,113 91,746 Other assets 12,505 2,764 Accrued interest payable 28,096 23,799 Other liabilities 35,967 141,479 __________ ___________ Net cash provided by operating activities 762,404 790,231 __________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) in federal funds sold (6,175,000) (1,450,000) Purchases of securities (4,333,424) - Sale of securities - 938,526 Maturities of securities 5,536,262 957,375 Net (increase) decrease in loans 4,438,382 (1,654,383) Proceeds from sale of other real estate - - Purchases of properties and equipment (265,763) (1,829) __________ __________ Net cash used in investing activities (799,543) (1,210,311) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits 1,125,853 (225,093) Net increase (decrease) in time deposits (789,604) 719,420 Dividends paid - - Principal paid on short-term debt - (400,000) __________ __________ Net cash provided (used) by financing activities 336,249 94,327 __________ __________ Net decrease in cash and cash equivalents 299,110 (325,753) CASH AND CASH EQUIVALENTS, BEGINNING 1,941,494 2,749,552 __________ __________ CASH AND CASH EQUIVALENTS, ENDING $ 2,240,604 $ 2,423,799 __________ __________
See Notes to Consolidated Financial Statements 6 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows, continued For the three months ended March 31, 1998 and 1997 (Unaudited) _______________________________________________________________________________
1998 1997 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 1,431,210 $ 1,314,136 __________ __________ Income taxes paid $ 168,069 $ 4,396 __________ __________ 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 March 31, 1998 and for the periods ended March 31, 1998 and 1997 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 Bank's audited financial statements and the notes thereto as of December 31, 1997, included in the Bank's Annual Report for the fiscal year ended December 31, 1997. 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. NOTE 2. ALLOWANCES FOR CREDIT LOSSES The following is an analysis of the allowance for credit losses for the three months ended March 31.
1998 1997 ____ ____ Balance at January 1 $ 1,452,126 $ 1,002,455 Provision charged to operations 75,000 75,000 Loans charged off, net of recoveries 14,842 (14,899) __________ __________ Balance at March 31 $ 1,541,968 $ 1,062,556
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 March 31, 1998 and 1997 is as follows:
1998 1997 ____ ____ Commitments to extend credit $ 4,105,966 $ 4,638,538 Standby letters of credit 257,000 197,100 __________ __________ $ 4,362,966 $ 4,835,638
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the quarter ended March 31, 1998, the Bank earned $524,939 in net income compared to $457,202 for the quarter ended March 31, 1997. The in- crease of $67,737 was due to decreases in noninterest expense and increases in interest income. Interest income was $2,860,438 for the quarter ended March 31, 1998, compared to $2,686,017 for the same period of 1997. The quarterly increase was due mainly to an increase of $9.5 million in average earning assets for the quarter ended March 31, 1998, as compared to the quarter ended March 31, 1997. Interest expense for the quarter ended March 31, 1998 was $1,459,306, up $121,371 from $1,337,935 for the quarter ended March 31, 1997. The increase was due to an increase of $9.4 million in average interest bearing liabilities. The provision for credit losses was $75,000 for the quarters ended March 31, 1998 and March 31, 1997, respectively. Management believes the provision and the resulting allowance for credit losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at March 31, 1998 were $146,007,398 compared to $145,072,317 at December 31, 1997. Net loans have decreased by $4.5 million. These funds have been invested in federal funds to fund future loans. CAPITAL Shareholder's equity totaled $16,502,573 at March 31, 1998, an increase of $518,422 over the December 31, 1997 balance of $15,984,151. The increase was the result of earnings for the three months offset by a decrease in the market value of securities that are classified as available for sale. 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 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: May 14, 1998 By: s/Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer 10 EX-27 2 ART. 9 FIN. DATA SCHEDULE FOR 1ST QUARTER 10QSB
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CARDINAL BANKSHARES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT MARCH 31, 1998 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1998 MAR-31-1998 2,240,604 5,000,000 10,000,000 0 30,804,860 13,090,347 13,275,298 82,361,495 1,541,968 146,007,398 128,524,975 0 979,849 0 0 0 5,119,110 11,383,463 146,007,398 2,040,553 737,832 82,053 2,860,438 1,459,306 0 1,401,132 75,000 11,809 683,983 729,865 729,865 0 0 524,939 1.03 1.03 3.84 283,049 100,125 0 0 1,452,126 7,000 21,842 1,541,968 1,541,968 0 0
-----END PRIVACY-ENHANCED MESSAGE-----