-----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, KL6OCvnlnxcUPOlFrxWNFeXvFZEvIgrj6QuGoVzmsbzU9duYoKKezIaasRzVmh8T GVSZlPtScUiJjh6tnOGPQg== 0000916641-01-500935.txt : 20010814 0000916641-01-500935.hdr.sgml : 20010814 ACCESSION NUMBER: 0000916641-01-500935 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRGINIA FINANCIAL CORP CENTRAL INDEX KEY: 0001036070 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 541829288 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22283 FILM NUMBER: 1706339 BUSINESS ADDRESS: STREET 1: 24 SOUTH AUGUSTA ST CITY: STAUNTON STATE: VA ZIP: 24401 BUSINESS PHONE: 5408851232 MAIL ADDRESS: STREET 1: 24 SOUTH AUGUSTA ST CITY: STAUNTON STATE: VA ZIP: 24401 10-Q 1 d10q.txt FORM 10-Q DATED JUNE 30, 2001 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 Commission File Number 000-22283 VIRGINIA FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Virginia 54-1829288 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 24 South Augusta Street, Staunton, Virginia 24401 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (540) 885-1232 NONE (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class: Common Stock, $5.00 par value Outstanding as of August 8, 2001: 3,979,483 ================================================================================ VIRGINIA FINANCIAL CORPORATION INDEX
Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Statements of Income 3 Consolidated Balance Sheets 5 Consolidated Statements of Cash Flows 6 Consolidated Statements of Changes in Stockholders' Equity 8 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 11 Item 3. Quantitative and Qualitative Disclosure about Market Risk 12 Item 4. Virginia Financial Corporation and Subsidiaries Average Balances, Income and Expense, Yields and Rates 13 Part II. Other Information Item 1. Legal Proceedings 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits and Reports on Form 8-K 14 Signature 15 Exhibit 11. 16
Part 1 Item 1. VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
Three Months Ended JUNE 30 JUNE 30 2001 2000 ------ ------ Interest Income: Interest and Fee Income on Loans: Secured by Real Estate $5,350 $4,948 To Finance Agriculture & Farmers 49 59 Commercial & Industrial 941 973 Individuals for Household & Personal 662 771 Obligations of State & Political Tax-Exempt 59 7 Interest and Dividend Income on Securities: U.S. Treas & U.S. Gov't Agencies 679 1,346 Collateralized Mortgage Obligations 147 -- Mortgage Backed Securities 66 -- State & Political-Taxable 117 94 State & Political-Tax Exempt 425 438 Other Domestic Debt Securities 9 11 Equity Securities 73 22 Interest on Earning Deposits Due From Banks 1 2 Interest on Federal Funds Sold 202 27 Other Interest Income 21 24 ------ ------ Total Interest Income 8,801 8,722 ------ ------ Interest Expense: Interest on Deposits: NOW Accounts 237 308 Money Market Accounts 494 519 Other Savings Deposits 316 310 CD's of 100M or More 528 357 All Other Time Deposits 2,527 2,162 Interest on Fed Funds Purch'd & Repurchase Agreements 167 213 Interest on Other Borrowed Money -- 207 ------ ------ Total Interest Expense 4,269 4,076 ------ ------ Net Interest Income 4,532 4,646 Provision for Loan Losses 257 197 ------ ------ Net Interest Income after Provision for Loan Losses 4,275 4,449 ------ ------ Noninterest Income: Trust Department Income 351 405 Service Charges on Deposit Accts 397 363 Other Fee Income 571 336 All Other Non-Interest Income 35 36 ------ ------ Total Noninterest Income 1,354 1,140 ------ ------ Gains on securities 99 -- ------ ------ Noninterest Expense: Salaries & Employee Benefits 2,411 2,087 Expense of Premises & Fixed Assets 476 478 Computer Services 283 279 Other Non-Interest Expense 839 747 ------ ------ Total Non-Interest Expense 4,009 3,591 ------ ------ Income Before Income Taxes 1,719 1,998 Provision for Income Taxes 442 547 ------ ------ Net Income $1,277 $1,451 ====== ====== Per Share Data, Net Income, basic and diluted $ 0.32 $ 0.36 Cash Dividends $ 0.17 $ 0.17
The accompanying notes are an integral part of these statements 3 Part 1 Item 1. VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
Six Months Ended JUNE 30 JUNE 30 2001 2000 ------- ------- Interest Income: Interest and Fee Income on Loans: Secured by Real Estate $10,781 $ 9,542 To Finance Agriculture & Farmers 104 121 Commercial & Industrial 1,979 1,895 Individuals for Household & Personal 1,358 1,541 Obligations of State & Political Tax-Exempt 118 9 Interest and Dividend Income on Securities: U.S. Treas & U.S. Gov't Agencies 1,803 2,693 Collateralized Mortgage Obligations 147 -- Mortgage Backed Securities 66 -- State & Political-Taxable 236 188 State & Political-Tax Exempt 823 886 Other Domestic Debt Securities 20 21 Equity Securities 145 51 Interest on Earning Deposits Due From Banks 2 31 Interest on Federal Funds Sold 239 34 Other Interest Income 46 49 ------- ------- Total Interest Income 17,867 17,061 ------- ------- Interest Expense: Interest on Deposits: NOW Accounts 531 609 Money Market Accounts 924 1,004 Other Savings Deposits 612 616 CD's of 100M or More 1,049 678 All Other Time Deposits 5,038 4,201 Interest on Fed Funds Purch'd & Repurchase Agreements 367 391 Interest on Other Borrowed Money 32 365 ------- ------- Total Interest Expense 8,553 7,864 ------- ------- Net Interest Income 9,314 9,197 Provision for Loan Losses 408 406 ------- ------- Net Interest Income after Provision for Loan Losses 8,906 8,791 ------- ------- Noninterest Income: Trust Department Income 664 853 Service Charges on Deposit Accts 814 735 Other Fee Income 1,022 701 All Other Non-Interest Income 66 74 ------- ------- Total Noninterest Income 2,566 2,363 ------- ------- Gains on securities 102 16 ------- ------- Noninterest Expense: Salaries & Employee Benefits 4,426 3,874 Expense of Premises & Fixed Assets 996 947 Computer Services 568 559 Other Non-Interest Expense 1,640 1,566 ------- ------- Total Non-Interest Expense 7,630 6,946 ------- ------- Income Before Income Taxes 3,944 4,224 Provision for Income Taxes 1,069 1,172 ------- ------- Net Income $ 2,875 $ 3,052 ======= ======= Per Share Data Net Income, basic and diluted $ 0.72 $ 0.77 Cash Dividends $ 0.34 $ 0.34
The accompanying notes are an integral part of these statements 4 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF DOLLARS)
JUNE 30 DECEMBER 31 2001 2000 -------- -------- Assets Cash & Due from Banks $ 24,577 $ 18,146 Interest Earning Deposits Due From Banks 71 53 Federal Funds Sold 10,800 -- Securities (fair value: 2001, $113,392; 2000, $132,107) 113,143 132,345 Loans held for resale 8,519 2,383 Loans, net of allowance for loan losses, 2001, $3,904; 2000, $3,894 332,376 329,625 Bank Premises and Equipment, net 8,684 7,739 Deposit Intangibles 1,944 2,023 Other Assets 7,191 7,488 -------- -------- Total Assets $507,305 $499,802 ======== ======== Liabilities and Stockholders' Equity Liabilities Deposits Demand $ 73,777 $ 71,114 NOW Accounts 51,359 53,900 Money Market Checking 54,702 55,043 Savings 42,838 40,416 Time Deposits 212,236 204,768 -------- -------- Total Deposits 434,912 425,241 Securities Sold Under Agmt. to Repurchase 17,297 12,495 Other Borrowed Money -- 3,000 Federal Funds Purchased -- 6,000 Other Liabilities 2,135 2,140 -------- -------- Total Liabilities $454,344 $448,876 -------- -------- Stockholders' Equity Common Stock $ 19,898 $ 19,905 Surplus 12,994 13,027 Undivided Profits 19,403 17,882 Accumulated Other Comprehensive Income 666 112 -------- -------- Total Stockholders' Equity $ 52,961 $ 50,926 -------- -------- Total Liabilities and Stockholders' Equity $507,305 $499,802 ======== ========
The accompanying notes are an integral part of these statements 5 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
Six Months Ended JUNE JUNE 2001 2000 -------- -------- Cash Flows from Operating Activities Interest received $ 18,232 $ 16,874 Fees and other non-interest income 2,521 2,351 Interest paid (8,514) (7,758) Origination of loans available for sale (34,936) (11,959) Proceeds from sale of loans availabe for sale 28,800 11,783 Cash paid to suppliers and employees (7,140) (6,016) Income taxes paid (969) (1,000) -------- -------- Net cash provided by (used in) operating activities $ (2,006) $ 4,275 -------- -------- Cash Flows from Investing Activities Proceeds from maturities and calls of securities $ 46,616 $ 2,992 Proceeds from sales of securities 7,861 1,681 Purchases of securities (34,335) (751) Net increase in loans (3,259) (28,476) Capital expenditures (1,454) (328) Net decrease (increase) in other assets (372) 4 Proceeds from sale of other real estate 118 49 -------- -------- Net cash provided by (used in) investing activities $ 15,175 $(24,829) -------- -------- Cash Flows from Financing Activities Net increase in certificates of deposit $ 7,468 $ 8,414 Net increase in demand & savings deposits 2,202 4,548 Net decrease in federal funds purchased (6,000) (1,175) Net decrease in Federal Home Loan Bank advances (3,000) -- Net increase in securities sold under repurchase agreements 4,803 3,435 Payment to repurchase common stock (40) (532) Dividends paid (1,353) (1,356) -------- -------- Net cash provided by financing activities $ 4,080 $ 13,334 -------- -------- Net increase (decrease) in cash and cash equivalents $ 17,249 $ (7,220) Cash and cash equivalents at beginning of year 18,199 28,158 -------- -------- Cash and cash equivalents at end of year $ 35,448 $ 20,938 ======== ========
6 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (IN THOUSANDS OF DOLLARS)
Six Months Ended JUNE 30 JUNE 30 2001 2000 -------- -------- Reconciliation of net income to net cash provided by operating activities Net income $ 2,875 $ 3,052 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities Depreciation $ 466 $ 460 Provision for loan losses 408 406 Gain on sale of assets 27 -- Provision for deferred taxes -- -- Origination of loans available for sale (34,936) (11,959) Proceeds from sale of loans availabe for sale 28,800 11,783 Gain on sale of securities (102) (16) Decrease in taxes payable (8) -- Decrease (increase) in interest receivable 367 (68) Increase in interest payable 38 106 Decrease (increase) in prepaid expenses (28) 87 Increase (decrease) in accrued expenses (34) 403 Premium amortization 168 40 Decrease in deferred income (2) (8) Decrease in fees receivable (45) (11) -------- -------- Total Adjustments $ (4,881) $ 1,223 -------- -------- Net cash provided by operating activities $ (2,006) $ 4,275 ======== ======== Supplemental schedule of non-cash investing activities: Other real estate acquired in settlement of loans 101 313 ======== ======== Unrealized gain on securities available for sale 836 209 ======== ========
The accompanying notes are an integral part of these statements 7 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY SIX MONTHS ENDED JUNE 30, 2000 AND 2001 (IN THOUSANDS OF DOLLARS)
Accumulated Other Common Capital Retained Comprehensive Comprehensive Stock Surplus Earnings Income (Loss) Income Total --------- --------- --------- ------------- ------------ --------- Balance, December 31, 1999 19,986 13,478 14,389 (1,733) 46,120 Comprehensive income: Net income 3,052 3,052 3,052 Other comprehensive income net of tax, Unrealized holding gains arising during the period (net of tax, $76,495) 149 Reclassification adjustment (net of tax, $5,507) (11) ----------- Other comprehensive income (net of tax, $70,988) 138 138 44 ----------- Total comprehensive income 3,190 =========== Cash dividends ($0.34 per share) (1,356) (1,356) Stock repurchase of 16,190 shares (81) (451) (532) --------- --------- --------- --------- --------- Balance, June 30, 2000 $ 19,905 $ 13,027 $ 16,085 $ (1,595) $ 47,422 ========= ========= ========= ========= =========
Accumulated Other Common Capital Retained Comprehensive Comprehensive Stock Surplus Earnings Income Income Total --------- --------- --------- ------------- ----------- --------- Balance, December 31, 2000 19,905 13,027 17,882 112 50,926 Comprehensive income: Net income 2,875 2,875 2,875 Other comprehensive income net of tax: Unrealized holding gains arising during the period (net of tax, $320,206) 621 Reclassification adjustment (net of tax, $34,761) (67) ----------- Other comprehensive income (net of tax, $285,445) 554 554 554 ----------- Total comprehensive income 3,429 =========== Cash dividends ($0.34 per share) (1,353) (1,353) Stock repurchase of 1,525 shares (7) (33) (40) --------- --------- --------- --------- --------- Balance, June 30, 2001 $ 19,898 $ 12,994 $ 19,404 $ 666 $ 52,962 ========= ========= ========= ========= =========
The accompanying notes are an integral part of these statements 8 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Interim Financial Statements The accompanying financial statements of Virginia Financial Corporation and its Subsidiary have not been audited by independent accountants except for the balance sheet at December 31, 2000. In the opinion of the company's management, the financial statements reflect all adjustments necessary to present fairly the results of operations for the three and six month periods ended June 30, 2001 and 2000, the company's financial position at June 30, 2001 and December 31, 2000, and cash flows for the six month periods ended June 30, 2001 and 2000. These adjustments are of a normal recurring nature. Operating results for the three and six month periods ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001, or any other period. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended December 31, 2000. On November 14, 1996, the shareholders approved an Agreement and Plan of Reorganization and related Plan of Share Exchange, relating to the adoption of a bank holding company structure, with Virginia Financial Corporation (herein after referred to as "the Company"), serving as the holding company for the Bank. This transaction was consumated on January 2, 1997. Note 2. Securities as of June 30, 2001 and December 31, 2000 are summarized below.
(IN THOUSANDS OF DOLLARS) June 30, 2001 December 31, 2000 Unrealized Unrealized Book Market Gain (Loss) Book Market Gain (Loss) ---- ------ ----------- ---- ------ ----------- Securities Available for Sale U.S. Treasury Securities $ 5,952 $ 6,244 $ 292 $ 5,947 $ 6,159 $ 212 U.S. Agency Securities 23,005 23,345 340 34,069 34,059 (10) Collateralized Mort. Oblig 15,737 15,768 31 Mortgage Backed 8,779 8,733 (46) Obligations of State and Political Subdivisions 41,343 42,008 665 30,520 30,730 210 Other Securities 7,191 6,915 (276) 5,826 5,585 (241) -------- -------- -------- -------- -------- -------- Total Securities Available for Sale $102,007 $103,013 $ 1,006 $ 76,362 $ 76,533 $ 171 ======== ======== ======== ======== ======== ======== Securities Held to Maturity U.S. Treasury Securities $ 4,495 $ 4,569 $ 74 $ 4,493 $ 4,515 $ 22 U.S. Agency Securities -- -- -- 39,791 39,503 (288) Obligations of State and Political Subdivisions 5,635 5,810 175 11,528 11,556 28 Other Securities -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- Total Securities Held to Maturity $ 10,130 $ 10,379 $ 249 $ 55,812 $ 55,574 $ (238) ======== ======== ======== ======== ======== ========
9 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS) Note 3. The consolidated loan portfolio, stated at face amount, is composed of the following:
June 30, 2001 December 31, 2000 ------------- ----------------- Real Estate Loans: Construction and Land Development $ 26,255 $ 22,633 Secured by Farmland 2,283 3,738 Secured by 1-4 Family residential 142,422 129,510 Other Real Estate Loans 84,613 94,893 Loans to Farmers (Except Those Secured by Real Estate) 1,992 2,534 Commercial and Industrial Loans (Except Those Secured by Real Estate) 45,897 45,836 Loans to Individuals for Personal Expenditures 28,836 29,916 All Other Loans 4,307 4,783 -------- -------- Total Loans 336,605 333,843 Less, Unearned Income Reflected in Loans 325 324 -------- -------- Loans, Net of Unearned Income $336,280 $333,519 ======== ========
The Bank had loans in a Nonaccrual category of $965 on December 31, 2000 and $686 on June 30, 2001. Note 4. Allowance for Loan Losses Analysis of the Allowance for Loan Losses
For the Six Months Ended June 30, 2001 June 30, 2000 ------------- ------------- Balance at Beginning of Period 3,894 3,470 Charge-Offs (452) (183) Recoveries 54 58 ------- ------- Net Charge-Offs (398) (125) Provision for Loan Losses 408 406 ------- ------- Balance at End of Period $ 3,904 $ 3,751 ======= =======
10 Part 1 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Net income for the second quarter of 2001 was $1,277,000 compared to $1,451,000 for the second quarter of 2000. This represents a decrease of $174,000 or 12.0%. Net income for the first six months of 2001 amounted to $2,875,000, a decrease of $177,000 or 5.8% under the $3,052,000 for the comparable period in 2000. Interest income increased $79,000 or .9% and total average earning assets increased $22,334,000 or 5.0% comparing the six months ended June 30, 2001 and 2000. The yield on average earning assets was 7.9% for the six-month period ending June 30, 2001 and 2000 respectively. Interest expense increased $689,000 or 8.8% and total average interest bearing liabilities increased $13,356,000 or 3.7%. The cost of funds was 4.6% and 4.3% for the first six months ended of 2001 and 2000. The net interest spread was 3.3% and 3.6% for the same six months ended of 2001 and 2000. Non-interest income increased $214,000 or 18.8% the second quarter of 2001 compared to 2000. In comparing the six-month period ending June 30 for 2001 and 2000, non-interest income went from $2,363,000 in 2000 to $2,566,000 in 2001 for an increase of $203,000 or 8.6%. These increases were due to an increase in business volume generated by the secondary mortgage department. Non-interest expenses increased $418,000 or 11.6% the second quarter of 2001 compared to 2000. Non-interest expenses increased $684,000 or 9.8% comparing the six-month periods ending June 30, 2001 and 2000. These increases were mainly due to increases in salaries and employee benefits, but also to increases in premises and fixed asset expenses associated with the conversion to a new computer system. Financial Condition - ------------------- Total assets increased $11,450,000 the second quarter of 2001 compared to a increase of $14,220,000 the second quarter of 2000. Total assets have increased $7,503,000 the first six months of 2001 compared to and increase of $17,025,000 in 2000. During the second quarter of 2001, fed funds sold decreased $2,975,000. Those funds contributed to an overall increase in cash & due from banks of $7,610,000. Those sources of funds allowed for an increase in loans of $3,139,000 and the investment portfolio of $3,101,000 during the three-month period ending June 30, 2001. A decrease of the investment portfolio of $19,202,000 over the first six months of 2001 has allowed for the increase in loans of $8,887,000 and federal funds sold of $10,800,000 in that time period. Along with those changes, deposit growth for the first six months of 2001 was $9,671,000 which was used to reduce borrowings by $9,000,000. During the second quarter of 2000, fed funds sold decreased $7,100,000; the investment portfolio was reduced by $1,620,000; deposit growth was $4,791,000; and all other short term borrowings increased by $8,550,000. Those sources of funds were used to fund loan growth of $16,908,000 and increase cash & due from banks by $5,783,000. The six-month period ending June 30, 2000 consisted of deposit growth of $12,962,000, growth in securities sold under agreement to repurchase of $3,435,000, a reduction of the investment portfolio of $3,586,000, and a reduction in cash & due from banks of $4,020,000. Those sources of funds were used to fund loan growth of $27,933,000. Capital and Liquidity - --------------------- Total Capital for the company went from $50,926,000 to $52,961,000 for an increase of $2,035,000 or 4.0% during the first six months of 2001. This increase was due to an increase in the company's retained earnings and the overall market value of the investment portfolio that is classified available for sale. Due to regulatory guidelines, the company applies different risk factors to all of its assets and certain off balance sheet items in determining a total risk-based capital ratio. This ratio is the quantitative measure used by certain regulatory agencies as a guide to ensure that a company is meeting their necessary capital requirements. The company's ratio for the six-month period ending June 30, 2001 of 15.34% was well over the regulators acceptable guidelines for capital position. Liquidity refers to the Company's ability to meet demands on cash. Such demands can arise from several areas such as withdrawals on deposits, payments of borrowings or loan growth. Management is constantly assessing the company's ability to withstand such demands on cash through such methods as interest rate risk analysis, industry comparisons, and maturity and repricing analysis of all assets and liabilities. The Company's primary sources of liquidity come from cash & due from banks, federal funds sold, and securities with the available for sale classification. The Company also has the ability to borrow funds from its correspondent banks and the Federal Home Loan Bank of Atlanta on a day-by-day basis. Overall, management feels the Company is well stabilized in order to handle not only the normal demands of cash, but also those that may arise above the normal demands. 11 Future Operations - ------------------ On June 12, 2001 Virginia Financial Corporation signed with Virginia Commonwealth Financial Corporation a definitive agreement to join the two companies in a merger-of-equals transaction. Upon the approval of the shareholders of each separate company, a new company, known as Virginia Financial Group, Inc., will be the holding company for: Planters Bank & Trust Company of Virginia - in Staunton, Virginia, Second Bank & Trust - in Culpeper, Virginia, Caroline Savings Bank - in Bowling Green, Virginia, Virginia Heartland Bank - in Fredericksburg, Virginia, and Virginia Commonwealth Trust Company - in Culpeper, Virginia. The merger is anticipated to be completed sometime during the fourth quarter of 2001 pending the approval of the each company's shareholders. As of July 23, 2001 Planters Bank & Trust Company of Virginia has completed the construction of an 18,000 square foot operations center. The new operations center houses the bank's proof and transit department, secondary mortgage department and other operational support departments. With the opening of this building, the bank has taken care of its overcrowding problem at the main office. To date, the total cost capitalized for the building is approximately $1,320,000. Part 1 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in information reported as of December 31, 2000, in Form 10-K. 12 VIRGINIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
(000 Omitted) Six Months Ended June 30 2001 2000 Average Income/ Yield/ Average Income/ Yield/ ASSETS Balance Expense Rate Balance Expense Rate ----------- ---------- ---------- ----------- --------- --------- Securities: Taxable $ 81,617 $ 2,430 5.95% $ 96,043 $ 2,965 6.17% Tax-exempt (1) 36,189 1,248 6.90% 37,839 1,342 7.09% ----------- ---------- ---------- ----------- --------- --------- Total Securities $ 117,806 $ 3,678 6.24% $ 133,882 $ 4,307 6.43% Loans (net of earned income): Taxable 332,250 14,222 8.56% 306,653 13,100 8.54% Tax-Exempt (1) 4,328 178 8.23% 339 13 7.67% ----------- ---------- ---------- ----------- --------- --------- Total Loans 336,578 14,400 8.56% 306,992 13,113 8.54% Federal Home Loan Bank Stock 1,346 47 6.98% 1,282 49 7.64% Interest Earning Deposits Due From Banks 64 2 6.25% 1,066 31 5.82% Fed Funds Sold and Repurchase Agreements 10,893 239 4.39% 1,131 34 6.01% ----------- ---------- ---------- ----------- --------- --------- Total Earning Assets 466,687 18,366 7.87% 444,353 17,534 7.89% ---------- --------- Less Allowance for Loan Losses (3,906) (3,622) Total Nonearning Assets 37,916 34,776 ----------- ----------- Total Assets $ 500,697 $ 475,507 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing deposits: NOW Accounts $ 53,061 $ 531 2.00% $ 50,030 $ 609 2.43% Money Market Savings 55,265 925 3.35% 55,618 1,004 3.61% Regular Savings 41,303 612 2.96% 41,600 616 2.96% Certificates of Deposit: Less than $100,000 173,395 5,037 5.81% 162,198 4,201 5.18% $100,000 and More 34,678 1,049 6.05% 26,998 678 5.02% ----------- ---------- ---------- ----------- --------- --------- Total Interest Bearing Deposits 357,702 8,154 4.56% 336,444 7,108 4.23% Fed Funds Purchased & Repurchase Agreements 16,566 367 4.43% 14,086 391 5.55% Other Borrowed Money 1,097 32 5.83% 11,479 365 6.36% ----------- ---------- ---------- ----------- --------- --------- Total Interest Bearing Liabilities 375,365 8,553 4.56% 362,009 7,864 4.34% ---------- --------- Noninterest Bearing Liabilities Demand Deposits 71,202 64,772 Other Liabilities 2,065 2,045 ----------- ----------- Total Liabilities 448,632 428,826 Stockholders' Equity 52,065 46,681 ----------- ----------- Total Liabilities and Stockholders' Equity $ 500,697 $ 475,507 =========== =========== Net Interest Income $ 9,813 $ 9,670 ========== ========= Interest Rate Spread 3.31% 3.55% Interest Expense as a Percent of Average Earning Assets 3.67% 3.54% Net Interest Margin 4.21% 4.35%
(1) Income and yields are reported on a taxable-equivalent basis assuming a federal tax rate of 34% in 2000 and 2001 13 VIRGINIA FINANCIAL CORPORATION PART II. OTHER INFORMATION Item 1. Legal Proceedings As of June 30, 2001 neither the corporation nor the bank was a party to any legal proceedings. Item 2. Not Applicable Item 3. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Virginia Financial Corporation's annual meeting of shareholders was held on Monday, April 23, 2001 at the Corporation's main banking facility in Staunton, Virginia. Information relating to the solicitation of proxies required by this item is incorporated by reference from the Corporation's proxy statement dated March 23, 2001 for the Corporation's Annual Meeting of Shareholders held April 23, 2001, filed with the Commission on March 23, 2001. One item was submitted to the shareholders to be voted upon: (1) To elect directors of the company. The votes cast for, or withheld for the one item were as follows: (1) Election of Directors of the company. Name For Withheld ---- --- -------- Lee S. Baker 3,009,630 14,900 Benham M. Black 2,990,493 34,037 Harry V. Boney 3,023,066 1,464 Jan S. Hoover 3,021,634 2,896 Martin F. Lightsey 2,994,411 30,119 James S. Quarforth 2,964,739 59,791 Item 5. Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) A report on Form 8K was filed on June 13, 2001 with the purpose of explaining the agreement of a merger-of-equals between Virginia Financial Corporation and Virginia Commonwealth Financial Corporation. That report is hereby incorporated by reference. (b) Exhibits The following exhibits are filed with this Form 10-Q or incorporated by reference to previous filings.
Number Description ------- ----------- Exhibit 3. (i) Articles of Incorporation incorporated by reference to Exhibit 3.1 of the Company's Form 8-B successor registration statement filed March 24, 1997. (ii) Bylaws incorporated by reference to Exhibit 3.2 of the Company's Form 8-B successor registration statement filed March 24, 1997. Exhibit 11. EPS Computation attached.
14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Virginia Financial Corporation (Registrant) Date August 10, 2001 /s/ Fred D. Bowers ------------------------- --------------------------------------- Fred D. Bowers, Secretary/Treasurer (Principal Accounting Officer and Duly Authorized Officer) 15 EX-11 3 dex11.txt SHARES OUTSTANDING & EARNINGS PER SHARE Exhibit 11. Computation of Weighted Average Shares Outstanding and Earnings Per Share Shares Outstanding End of Month - 2nd Quarter
2001 -------------- April 3,979,483 May 3,979,483 June 3,979,483 -------------- 11,938,449 Divided by: 3 months -------------- 3,979,483 ============== Net Income 1,276,642 ============== Net Income Per Share - Basic $ 0.32 Shares Outstanding End of Month - YTD January 3,981,008 February 3,979,483 March 3,979,483 April 3,979,483 May 3,979,483 June 3,979,483 -------------- 23,878,423 Divided by: 6 months -------------- 3,979,737 ============== Net Income 2,874,521 ============== Net Income Per Share - Basic & Diluted $ 0.72
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