-----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, BWeoFtI5xEh698ixIsj2mXTNV/dbcw83PTXWjkjjWLTvOOrt8yT5DjWWIZGY5Zyv B4J0qu0+hqWwPpJCk50Y2g== 0001046249-97-000004.txt : 19971113 0001046249-97-000004.hdr.sgml : 19971113 ACCESSION NUMBER: 0001046249-97-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: 97715557 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 September 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 September 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 September 30, 1997 and December 31, 1996.......................................................3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 1997 and 1996......................4 Consolidated Statements of Stockholders' Equity for the Periods Ended September 30, 1997 and 1996...............................5 Consolidated Statements of Cash Flows for the Nine Months Ended September 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 September 30, 1997 and December 31, 1996 ________________________________________________________________________________
September 30, December 31, 1997 1996 ____________ ____________ (Unaudited) (Audited) ASSETS Cash and due from banks $ 2,114,886 $ 2,749,552 Federal funds sold 8,700,000 500,000 Investment securities available for sale 29,791,850 30,338,456 Investment securities held to maturity; market value of $11,538,016 in 1997 and $13,361,576 in 1996 11,439,621 13,383,394 Loans, net of allowance for credit losses of $1,391,660 in 1997 and $1,002,455 in 1996 85,863,277 85,372,459 Premises and equipment 1,639,886 1,560,582 Accrued income 981,335 1,053,576 Other assets 1,202,596 1,463,702 ___________ ___________ Total assets $141,733,451 $136,421,721 ___________ ___________ LIABILITIES Demand deposits $ 11,908,762 $ 12,585,858 NOW deposits 9,050,350 8,572,681 Savings deposits 17,553,530 17,905,685 Large denomination time deposits 9,961,601 10,693,230 Other time deposits 74,311,808 68,666,993 ___________ ___________ Total deposits 122,786,051 118,424,447 Short-term debt - 400,000 Long-term debt 2,400,000 2,400,000 Accrued interest payable 279,017 247,000 Other liabilities 470,541 415,355 ___________ ___________ Total liabilities 125,935,609 121,886,802 ___________ ___________ 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 4,655,360 4,655,360 Surplus 1,200,000 1,200,000 Retained earnings 9,745,002 8,585,007 Unrealized appreciation (depreciation) on investment securities available for sale, net of income taxes 197,480 94,552 ___________ ___________ Total stockholders' equity 15,797,842 14,534,919 ___________ ___________ Total liabilities and stockholders' equity $141,733,451 $136,421,721 ___________ ___________
See Notes to Consolidated Financial Statements 3 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations For the quarter and nine months ended September 30, 1997 and 1996 (Unaudited) ________________________________________________________________________________
Nine Nine Quarter Quarter Months Months Ended Ended Ended Ended September September September September 30, 1997 30, 1996 30, 1997 30, 1996 ________ ________ ________ ________ (Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 2,027,228 $ 1,901,159 $ 6,022,325 $ 5,548,529 Federal funds sold 115,529 41,184 196,914 137,125 Taxable investment securities 517,421 535,775 1,616,004 1,626,892 Investment securities exempt from federal tax 114,109 113,357 363,852 348,302 __________ __________ __________ __________ Total interest income 2,774,287 2,591,475 8,199,095 7,660,848 INTEREST EXPENSE 1,451,389 1,319,464 4,190,984 3,978,776 __________ __________ __________ __________ Net interest income 1,322,898 1,272,011 4,008,111 3,682,072 PROVISION FOR CREDIT LOSSES 275,000 75,000 425,000 250,000 __________ __________ __________ __________ Net interest income after provision for credit losses 1,047,898 1,197,011 3,583,111 3,432,072 OTHER INCOME: Service charges on deposit accounts 38,331 30,216 109,838 87,527 Other service charges and fees 6,473 3,479 19,929 8,001 Securities gains (1,706) (11,239) 5,102 21,252 Other real estate owned gains 231,494 - 231,494 9,696 Other income 51,916 46,409 169,608 157,379 __________ __________ __________ __________ Total other income 326,508 68,865 535,971 283,855 OTHER EXPENSE: Salaries and employee benefits 455,793 431,225 1,200,898 1,280,746 Occupancy expense 28,245 26,733 77,777 82,789 Equipment expense 65,480 59,178 175,434 144,774 Other expense 212,475 193,734 717,158 570,818 __________ __________ __________ __________ Total other expense 761,993 710,870 2,171,267 2,079,127 __________ __________ __________ __________ Income before income taxes 612,413 555,006 1,947,815 1,636,800 Income tax expense 185,397 153,900 550,397 460,032 __________ __________ __________ __________ Net income $ 427,016 $ 401,106 $ 1,397,418 $ 1,176,768 __________ __________ __________ __________ NET INCOME PER SHARE $ .92 $ 0.86 $ 3.00 $ 2.53 __________ __________ __________ __________
See Notes to Consolidated Financial Statements 4 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders' Equity For the nine months ended September 30, 1997 and September 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 1,176,768 1,176,768 Change in market value of investment securities available for sale, net of income taxes (495,559) (495,559) _________ _________ __________ ________ __________ September 30, 1996 $4,655,360 $1,200,000 $ 8,658,357 $(201,030) $14,312,687 _________ _________ __________ ________ __________ January 1, 1997 $4,655,360 $1,200,000 $ 8,585,007 $ 94,552 $14,534,919 Net income 1,397,418 1,397,418 Change in market value of investment securities available for sale, net of income taxes 102,928 102,928 Dividends paid (237,423) (237,423) _________ _________ __________ ________ __________ September 30, 1997 $4,655,360 $1,200,000 $ 9,745,002 $ 197,480 $ 15,797,842 _________ _________ __________ ________ __________
See Notes to Consolidated Financial Statements 5 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the nine months ended September 30, 1997 and 1996 (Unaudited) _______________________________________________________________________________
1997 1996 ____ ____ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,397,418 $ 1,176,768 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 131,949 123,600 Accretion of discounts on securities, net of amortization of premiums (7,491) (57,403) Amortization of loan fees (75,991) (44,451) Provision for credit losses 425,000 250,000 Deferred income taxes (86,000) 191,465 Net realized gains on securities (5,102) (21,252) Net realized gains on sale of ORE (231,494) (9,696) Deferred compensation & pension expense - 47,332 Changes in assets and liabilities: Accrued income 72,241 77,233 Other assets 117,219 288,523 Accrued interest payable 32,017 29,310 Other liabilities 55,186 (129,671) __________ ___________ Net cash provided by operating activities 1,824,952 1,921,758 __________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) in federal funds sold (8,200,000) (300,000) Purchases of securities (7,806,029) (13,758,292) Sale of securities 2,075,318 3,264,391 Maturities of securities 8,389,634 14,183,383 Net increase in loans (839,827) (4,370,651) Proceeds from sale of other real estate 408,358 96,249 Purchases of properties and equipment (211,253) (191,726) __________ __________ Net cash used in investing activities (6,183,799) (1,076,646) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits (551,582) 313,078 Net increase (decrease) in time deposits 4,913,186 (886,353) Dividends paid (237,423) - Principal paid on short-term debt (400,000) - __________ __________ Net cash provided (used) by financing activities 3,724,181 (573,275) __________ __________ Net increase (decrease) in cash & cash equiv. (634,666) 271,837 CASH AND CASH EQUIVALENTS, BEGINNING 2,749,552 1,907,215 __________ __________ CASH AND CASH EQUIVALENTS, ENDING $ 2,114,886 $ 2,179,052 __________ __________
See Notes to Consolidated Financial Statements 6 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows, continued For the nine months ended September 30, 1997 and 1996 (Unaudited) _______________________________________________________________________________
1997 1996 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 4,158,967 $ 3,949,466 __________ __________ Income taxes paid $ 584,830 $ 182,964 __________ __________ SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES: Other real estate acquired in settlement of loans $ - $ 7,616
See Notes to Consolidated Financial Statements 7 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES 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 July 1, 1996 and used the pooling of interests accounting method. 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 three banking offices. BASIS OF PRESENTATION The consolidated financial statements as of September 30, 1997 and for the periods ended September 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. 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 LOAN LOSSES The following is an analysis of the allowance for loan losses for the nine months ended September 30.
1997 1996 ____ ____ Balance at January 1 $ 1,002,455 $ 1,134,182 Provision charged to operations 425,000 250,000 Loans charged off, net of recoveries (35,795) (444,238) __________ __________ Balance at September 30 $ 1,391,660 $ 939,944
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 September 30, 1997 and 1996 is as follows:
1997 1996 ____ ____ Commitments to extend credit $ 5,602,000 $ 5,578,372 Standby letters of credit 188,000 176,000 __________ __________ $ 5,790,000 $ 5,754,372
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the quarter ended September 30, 1997, the Bank earned $427,016 in net income compared to $401,106 for the quarter ended September 30, 1996. The in- crease was $25,910, as net interest income remained relatively stable. Interest income was $2,774,287 for the quarter ended September 30, 1997, compared to $2,591,475 for the same period of 1996. The $182,812 increase was due mainly to an increase in average earning assets for the quarter ended September 30, 1997, as compared to the quarter ended September 30, 1996. Interest expense for the quarter ended September 30, 1997 was $1,451,389, up $131,925 from $1,319,464 for the quarter ended September 30, 1996. The increase was due primarily to an increase in interest bearing liabilities when compared to the quarter ended September 30, 1996. The provision for loan losses was $275,000 and $75,000 for the quarters ended September 30, 1997 and 1996, respectively. Management believes the provision and the resulting allowance for loan losses is adequate. CHANGES IN FINANCIAL CONDITION Total assets at September 30, 1997 were $141,733,451 compared to $136,421,721 at December 31, 1996. Net loans have increased by $491,000 since December 31, 1996. The loans were funded by an increase in deposits. CAPITAL ADEQUACY Shareholder's equity amounted to $15,797,842 at September 30, 1997, an increase of $1,262,923 over the December 31, 1996 balance of $14,534,919. The increase was a result of the earnings for the nine months and an increase in the market value of securities that are classified as available for sale, less the payment of $237,423 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 classified as well capitalized. 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: November 12, 1997 By: s/Ronald Leon Moore President, Chief Executive Officer Date: November 12, 1997 By: s/Christopher B. Snodgrass Assistant Vice President and Financial Officer 10 EX-27 2 ART. 9 FIN. DATA SCHEDULE FOR 3RD QUARTER 10QSB
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CARDINAL BANKSHARES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1997 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 9-MOS DEC-31-1997 SEP-30-1997 2,114,886 0 8,700,000 0 29,791,850 11,439,621 11,538,016 87,254,937 (1,391,660) 141,733,451 122,786,051 0 749,558 2,400,000 0 0 4,655,360 11,142,482 141,733,451 6,022,325 1,979,856 196,914 8,199,095 4,190,984 0 4,008,111 425,000 5,102 2,171,267 1,947,815 1,947,815 0 0 1,397,418 3.00 3.00 3.98 278,557 511,240 0 0 1,002,455 35,795 0 1,391,660 1,391,660 0 0
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