-----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, TYoJ6W/WPebnCu01yz04tQMbDEPv5GDilVV7BsrJxA8oEjgMA4rv5QkU+OmAO27d KuHIxe51/8QfVqQk2mDLGA== 0001046249-98-000019.txt : 19980814 0001046249-98-000019.hdr.sgml : 19980814 ACCESSION NUMBER: 0001046249-98-000019 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 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: 98684688 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, 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 June 30, 1998 was 511,911. Transitional Small Business Disclosure Format (check one):Yes No X Page 1 of 13. 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, 1998 and December 31,1997........................................................3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1998 and 1997............................4 Consolidated Statements of Stockholders' Equity for the Periods Ended June 30, 1998 and 1997....................................5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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................................................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, 1998 and December 31, 1997 ________________________________________________________________________________
June 30, December 31, 1998 1997 ____________ ____________ (Unaudited) (Audited) ASSETS Cash and due from banks $ 2,527,637 $ 1,941,494 Interest-bearing deposits with banks 5,020,797 5,000,000 Federal funds sold 8,150,000 3,825,000 Investment securities available for sale 27,686,235 31,663,068 Investment securities held to maturity; market value of $15,188,606 in 1998 and $13,614,488 in 1997 15,008,570 13,430,624 Loans, net of allowance for credit losses of $1,558,698 in 1998 and $1,452,126 in 1997 81,695,906 85,304,739 Premises and equipment 2,065,515 1,687,859 Accrued income 1,145,803 1,093,063 Other assets 1,299,193 1,126,470 ___________ ___________ Total assets $144,599,656 $145,072,317 ___________ ___________ LIABILITIES Demand deposits $ 13,518,946 $ 12,229,167 NOW deposits 8,763,399 8,923,777 Savings deposits 17,212,186 17,507,178 Large denomination time deposits 12,348,735 15,120,658 Other time deposits 74,886,369 74,407,946 ___________ ___________ Total deposits 126,729,635 128,188,726 Short-term debt - - Long-term debt - - Accrued interest payable 275,329 269,032 Other liabilities 899,667 630,408 ___________ ___________ Total liabilities 127,904,631 129,088,166 ___________ ___________ 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 8,469,390 7,727,506 Unrealized appreciation (depreciation) on investment securities available for sale, net of income taxes 181,375 212,385 ___________ ___________ Total stockholders' equity 16,695,025 15,984,151 ___________ ___________ Total liabilities and stockholders' equity $144,599,656 $145,072,317 ___________ ___________
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, 1998 and 1997 (Unaudited) ________________________________________________________________________________
Six Six Quarter Quarter Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 1998 1997 1998 1997 ____ ____ ____ ____ (Unaudited) (Unaudited) (Unaudited) (Unaudited) INTEREST INCOME: Loans and fees on loans $ 1,983,332 $ 2,011,571 $ 4,023,885 $ 3,995,097 Federal funds sold 111,929 71,682 193,982 81,385 Taxable investment securities 573,269 532,420 1,170,887 1,098,583 Investment securities exempt from federal tax 150,897 123,118 291,111 249,743 __________ __________ __________ __________ Total interest income 2,819,427 2,738,791 5,679,865 5,424,808 INTEREST EXPENSE ON DEPOSITS 1,444,072 1,401,660 2,903,378 2,739,595 __________ __________ __________ __________ Net interest income 1,375,355 1,337,131 2,776,487 2,685,213 PROVISION FOR CREDIT LOSSES 60,000 75,000 135,000 150,000 __________ __________ __________ __________ Net interest income after provision for credit losses 1,315,355 1,262,131 2,641,487 2,535,213 OTHER INCOME: Service charges on deposit accounts 36,949 39,605 69,989 71,507 Other service charges and fees 6,425 6,527 12,258 13,456 Securities gains 7,774 - 19,583 6,808 Other income 16,545 69,941 53,579 117,692 __________ __________ __________ __________ Total other income 67,693 116,073 155,409 209,463 OTHER EXPENSE: Salaries and employee benefits 444,033 368,903 868,903 745,105 Occupancy expense 29,205 26,742 59,892 49,532 Equipment expense 64,971 51,675 120,169 109,954 Other expense 183,601 219,834 356,829 504,683 __________ __________ __________ __________ Total other expense 721,810 667,154 1,405,793 1,409,274 __________ __________ __________ __________ Income before income taxes 661,238 711,050 1,391,103 1,335,402 Income tax expense 178,098 197,850 383,024 365,000 __________ __________ __________ __________ Net income $ 483,140 $ 513,200 $ 1,008,079 $ 970,402 __________ __________ __________ __________ BASIC AND DILUTED EARNINGS PER SHARE $ 0.94 $ 1.00 $ 1.97 $ 1.90 __________ __________ __________ __________
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, 1998 and June 30, 1997 (Unaudited) ________________________________________________________________________________
ACCUMULATED TOTAL OTHER STOCK- COMMON RETAINED COMPREHENSIVE HOLDERS' STOCK SURPLUS EARNINGS INCOME (LOSS) EQUITY __________ _______ _________ _____________ ________ January 1, 1997 $4,655,360 $1,200,000 $ 8,585,007 $ 94,552 $14,534,919 Comprehensive income Net income 970,402 970,402 Net change in unrealized appreciation on investment securities available for sale, net of income taxes (16,913) (16,913) Total comprehensive __________ income 953,489 __________ Dividends paid ($.51 per share) (237,423) (237,423) _________ _________ __________ ________ __________ June 30, 1997 $4,655,360 $1,200,000 $ 9,317,986 $ 77,639 $15,250,985 _________ _________ __________ ________ __________ January 1, 1998 $5,119,110 $2,925,150 $ 7,727,506 $ 212,385 $15,984,151 Comprehensive income Net income 1,008,079 1,008,079 Net change in unrealized appreciation on investment securities available for sale, net of income taxes (31,010) (31,010) Total comprehensive __________ income 977,069 __________ Dividends paid ($.52 per share) (266,195) (266,195) _________ _________ __________ ________ __________ June 30, 1998 $5,119,110 $2,925,150 $ 8,469,390 $ 181,375 $ 16,695,025 _________ _________ __________ ________ __________
See Notes to Consolidated Financial Statements 5 CARDINAL BANKSHARES CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows For the six months ended June 30, 1998 and 1997 (Unaudited) _______________________________________________________________________________
1998 1997 ____ ____ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,008,079 $ 970,402 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 71,513 87,920 Accretion of discounts on securities, net of amortization of premiums 16,724 (29,777) Amortization of loan fees (51,216) (54,343) Provision for credit losses 135,000 150,000 Deferred income taxes - 103,132 Net realized gains on securities (19,583) (6,788) Net realized gains on sale of ORE - - Deferred compensation & pension expense 32,692 - Changes in assets and liabilities: Accrued income (52,740) 4,235 Other assets (208,521) (369,645) Accrued interest payable 6,297 10,774 Other liabilities 236,567 182,784 __________ ___________ Net cash provided by operating activities 1,174,812 1,048,694 __________ ___________ CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease in federal funds sold and interest-bearing deposits in banks (4,345,797) (7,200,000) Purchases of securities (7,457,125) (871,444) Sale of securities 12,125 1,043,761 Maturities of securities 9,799,762 4,504,317 Net (increase) decrease in loans 3,525,049 (2,230,958) Proceeds from sale of other real estate 51,772 29,978 Purchases of properties and equipment (449,169) (84,067) __________ __________ Net cash used in investing activities 1,136,617 (4,808,413) __________ __________ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in demand, NOW, and savings deposits 834,409 (850,309) Net increase (decrease) in time deposits (2,293,500) 5,078,079 Dividends paid (266,195) (237,423) Net decrease in short-term debt - (400,000) __________ __________ Net cash provided (used) by financing activities (1,725,286) 3,590,347 __________ __________ Net increase (decrease) in cash and cash equivalents 586,143 (169,372) CASH AND CASH EQUIVALENTS, BEGINNING 1,941,494 2,749,552 __________ __________ CASH AND CASH EQUIVALENTS, ENDING $ 2,527,637 $ 2,580,180 __________ __________
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, 1998 and 1997 (Unaudited) _______________________________________________________________________________
1998 1997 ____ ____ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 2,897,081 $ 2,728,621 __________ __________ Income taxes paid $ 398,309 $ 360,399 __________ __________ 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, 1998 and for the periods ended June 30, 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 Company's audited financial statements and the notes thereto as of December 31, 1997, included in the Company'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 Bank 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, Carroll, and Roanoke, Virginia and the City of Roanoke and Radford, Virginia through four 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.
1998 1997 ____ ____ Balance at January 1 $ 1,452,126 $ 1,002,455 Provision charged to operations 135,000 150,000 Loans charged off, net of recoveries 1,572 (23,076) __________ __________ Balance at June 30 $ 1,588,698 $ 1,129,379
8 NOTE 3. COMMITMENTS AND CONTINGENCIES The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instruments 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, 1998 and 1997 is as follows:
1998 1997 ____ ____ Commitments to extend credit $ 4,352,232 $ 3,988,684 Standby letters of credit 250,000 187,700 __________ __________ $ 4,602,232 $ 4,176,384
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS For the six month period ended June 30, 1998, the Bank earned $1,008,079, an increase of $37,677 over the $970,402 earned for the six months ended June 30, 1997. The increase was primarily due to an increase in net interest income and a slight reduction in total other expense. For the quarter ended June 30, 1998, the Bank earned $483,140 in net income compared to $513,200 for the quarter ended June 30, 1997. The decrease of $30,060 was due primarily to an increase in total other expense and a decrease in total other income. Interest income was $5,679,865 for the six month period ending June 30, 1998, compared to $5,424,808 for the six month period ending June 30, 1997. The increase was due mainly to increases in the volume of money market assets and investments as well as an increase overall loan yields. Interest expense for the six month period ending June 30, 1998, was $2,903,378 compared to $2,739,595 for the prior period in 1997. The increase was due primarily to increases in the interest rate paid on total time deposits coupled with an increase in the volume of total time deposits. The provision decreased by $15,000 to $135,000 from $150,000 for the six months ended June 30, 1998 compared to the six months ended June 30, 1997. The decreases in loan loss provision were accomplished because management of the Bank has continued to reduce the level of classified assets. CHANGES IN FINANCIAL CONDITION Total assets at June 30, 1998 were $144,599,656 compared to $145,072,317 at December 31, 1997. Net loans have decreased $3,608,833. These funds have been invested in federal funds to fund future loans. 9 CAPITAL ADEQUACY Shareholder's equity totaled $16,695,025 at June 30, 1998, an increase of $710,874 over the December 31, 1997 balance of $15,984,151. The increase was a result of earnings for the six months offset by dividends paid of $266,195 and a decrease in the market value of securities that are classified 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 June 30, 1998, the Bank had a ratio of Tier 1 capital to risk-weighted assets of 15.2%, a ratio of total risk-based capital to risk-weighted assets of 16.5% and a leverage ratio of Tier 1 capital to average total assets for the quarter ended June 30, 1998 of 9.0%. 10 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. 11 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, 1998 By: s/Ronald Leon Moore President, Chief Executive Officer, and Principal Financial Officer 12 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, 1998 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 6-MOS DEC-31-1998 JUN-30-1998 2,527,637 5,020,797 8,150,000 0 27,686,235 15,008,570 15,188,606 83,284,604 (1,588,698) 144,599,656 126,729,635 0 1,174,996 0 0 0 5,119,110 11,575,915 144,599,656 4,023,885 1,461,998 193,982 5,679,865 2,903,378 0 2,776,487 135,000 19,583 1,405,793 1,391,103 1,008,079 0 0 1,008,079 1.97 1.97 3.80 285,738 47,291 0 0 1,452,126 25,641 27,213 1,588,698 1,588,698 0 0
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