-----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, AJiAm3ye5sR2uU8IQsuPpX0lPKGbKE2v6KagCDJChY9bPb8VGxKPi6qXFraDeBAg 2W7NyZQ8Nd4xXd4+BjWlNQ== 0000916641-99-000684.txt : 19990816 0000916641-99-000684.hdr.sgml : 19990816 ACCESSION NUMBER: 0000916641-99-000684 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: SEC FILE NUMBER: 000-22283 FILM NUMBER: 99687339 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 VIRGINIA FINANCIAL CORPORATION ============================================================================ 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, 1999 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 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 Aug 1, 1999: 4,000,000 ================================================================================ VIRGINIA FINANCIAL CORPORATION INDEX Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Statement of Income 3 Consolidated Balance Sheet 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 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 Part 1 Item 1. VIRGINIA FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED JUNE 30 JUNE 30 1999 1998 ------------------- --------------------- Interest Income: Interest and Fee Income on Loans: Secured by Real Estate $ 3,992 $ 4,098 To Finance Agriculture & Farmers 64 77 Commercial & Industrial 891 883 Individuals for Household & Personal 828 917 Obligations of State & Political Tax-Exempt 1 3 Other 13 0 Interest and Dividend Income on Securities: U.S. Treas & U.S. Gov't Agencies 1,281 1,424 State & Political-Taxable 57 37 State & Political-Tax Exempt 313 194 Other Domestic Debt Securities 17 0 Equity Securities 87 5 Interest on Federal Funds Sold 104 78 ----------- ----------- Total Interest Income 7,648 7,716 ----------- ----------- Interest Expense: Interest on Deposits: NOW Accounts 292 301 Money Market Accounts 481 556 Other Savings Deposits 278 259 CD's of 100M or More 337 297 All Other Time Deposits 1,847 2,039 Interest on Fed Funds Purch'd & Repurchase Agreements 118 83 ----------- ----------- Total Interest Expense 3,353 3,535 ----------- ----------- Net Interest Income 4,295 4,181 Provision for Loan Losses 263 170 ----------- ----------- Net Interest Income after Provision for Loan Losses 4,032 4,011 ----------- ----------- Noninterest Income: Trust Department Income 379 312 Service Charges on Deposit Accts. 309 218 Other Fee Income 461 399 All Other Non-Interest Income 213 28 ----------- ----------- Total Noninterest Income 1,362 957 ----------- ----------- Noninterest Expense: Salaries & Employee Benefits 1,707 1,471 Expense of Premise & Fixed Assets 366 283 Other Non-Interest Expense 1,005 762 ----------- ----------- Total Non-Interest Expense 3,078 2,516 ----------- ----------- Income Before Income Taxes 2,316 2,452 Provision for Income Taxes 698 776 ----------- ----------- Net Income $ 1,618 $ 1,676 =========== =========== Per Share Data Net Income, basic and diluted $ 0.40 $ 0.42 Cash Dividends $ 0.16 $ 0.15
The accompanying notes are an integral part of these statements 3 Part 1 Item 1. VIRGINIA FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED JUNE 30 JUNE 30 1999 1998 ------------------- --------------------- Interest Income: Interest and Fee Income on Loans: Secured by Real Estate $ 7,986 $ 8,265 To Finance Agriculture & Farmers 132 147 Commercial & Industrial 1,762 1,760 Individuals for Household & Personal 1,691 1,836 Obligations of State & Political Tax-Exempt 2 6 Other 13 0 Interest and Dividend Income on Securities: U.S. Treas & U.S. Gov't Agencies 2,603 2,771 State & Political-Taxable 107 74 State & Political-Tax Exempt 619 363 Other Domestic Debt Securities 22 0 Equity Securities 188 5 Interest on Federal Funds Sold 145 139 ----------- ----------- Total Interest Income 15,270 15,366 ----------- ----------- Interest Expense: Interest on Deposits: NOW Accounts 574 586 Money Market Accounts 952 1,120 Other Savings Deposits 548 512 CD's of 100M or More 662 616 All Other Time Deposits 3,769 4,013 Interest on Fed Funds Purch'd & Repurchase Agreements 247 165 ----------- ----------- Total Interest Expense 6,752 7,012 ----------- ----------- Net Interest Income 8,518 8,354 Provision for Loan Losses 411 408 ----------- ----------- Net Interest Income after Provision for Loan Losses 8,107 7,946 ----------- ----------- Noninterest Income: Trust Department Income 766 622 Service Charges on Deposit Accts. 610 435 Other Fee Income 1,010 774 All Other Non-Interest Income 244 53 ----------- ----------- Total Noninterest Income 2,630 1,884 ----------- ----------- Noninterest Expense: Salaries & Employee Benefits 3,333 2,908 Expense of Premise & Fixed Assets 716 578 Other Non-Interest Expense 1,942 1,494 ----------- ----------- Total Non-Interest Expense 5,991 4,980 ----------- ----------- Income Before Income Taxes 4,746 4,850 Provision for Income Taxes 1,439 1,542 ----------- ----------- Net Income $ 3,307 $ 3,308 =========== =========== Per Share Data Net Income, basic and diluted $ 0.83 $ 0.83 Cash Dividends $ 0.32 $ 0.30
The accompanying notes are an integral part of these statements 4 VIRGINIA FINANCIAL CORPORATION CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF DOLLARS)
JUNE 30 DECEMBER 31 1999 1998 ----------- ----------- ASSETS Cash & Due from Banks $ 16,353 $ 17,557 Federal Funds Sold 6,175 0 Securities - U.S. Government 3,976 11,254 U.S. Agencies 83,692 80,836 Municipal Bonds 33,248 29,829 Equity Securities 5,416 7,873 Corporate Securities 1,223 500 ----------- ----------- Total Securities 127,555 130,292 Loans Secured by Real Estate 194,249 194,383 To Finance Agriculture & Farmers 2,642 2,598 Commercial & Industrial 36,494 37,693 Individuals for Household & Personal 40,285 43,527 Obligations of State & Political Tax Exempt 59 164 Other Loans 1,476 204 ----------- ----------- Total Loans 275,205 278,569 Less Reserve for Loan Losses (3,193) (3,212) ----------- ----------- Net Loans 272,012 275,357 Bank Premises and Equipment 6,420 5,782 Deposit Intangibles 230 242 Other Assets 5,883 4,910 ----------- ----------- Total Assets $ 434,628 $ 434,140 =========== =========== LIABILITIES AND CAPITAL Deposits Demand $ 60,596 $ 62,608 NOW Accounts 46,077 45,938 Money Market Checking 56,703 53,393 Savings 37,873 37,226 Time Deposits 173,147 171,267 ----------- ----------- Total Deposits 374,396 370,432 Securities Sold Under Agmt. to Repurchase 11,970 7,695 Federal Funds Purchased 0 9,475 Other Liabilities 1,721 1,074 Stockholders' Equity Common Stock 20,000 20,000 Surplus 13,554 13,554 Retained Earnings 13,461 11,434 Accumulated Other Comprehensive Income (474) 476 ----------- ----------- Total Stockholder's Equity 46,541 45,464 ----------- ----------- Total Liabilities and Stockholders' Equity $ 434,628 $ 434,140 =========== ===========
The accompanying notes are an integral part of these statements 5 VIRGINIA FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
SIX MONTHS ENDED JUNE 30 JUNE 1999 1998 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Interest received $ 15,310 $ 15,227 Fees and other non-interest income 2,464 1,872 Interest paid (6,499) (6,738) Cash paid to suppliers and employees (5,320) (4,301) Income taxes paid (1,560) (1,703) ----------- ----------- Net cash provided by operating activities $ 4,395 $ 4,357 ----------- ----------- Cash flows from investing activities Maturities of securities 25,999 27,380 Proceeds from sales of securities 12,307 0 Purchases of securities (36,879) (31,048) Net decrease in loans 2,934 1,806 Proceeds from sale of assets 226 1 Capital expenditures (1,089) (409) Net increase in other assets (27) (31) Other real estate acquired in settlement of loans (540) 0 Proceeds from sale of other real estate 161 0 ----------- ----------- Net cash provided by (used in) investing activities $ 3,092 $ (2,301) ----------- ----------- Cash flows from financing activities Net increase in certificates of deposit 1,881 8,040 Net increase in demand & savings deposits 2,083 1,056 Net decrease in federal funds purchased (9,475) (4,550) Net increase in securities sold under repurchase agreements 4,275 1,205 Dividends paid (1,280) (1,200) ----------- ----------- Net cash provided by (used in) financing activities $ (2,516) $ 4,551 ----------- ----------- Net increase in cash and cash equivalents 4,971 6,607 Cash and cash equivalents at beginning of year 17,557 14,684 ----------- ----------- Cash and cash equivalents at end of year $ 22,528 $ 21,291 =========== ===========
6 VIRGINIA FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (IN THOUSANDS OF DOLLARS)
SIX MONTHS ENDED JUNE 30 JUNE 30 1999 1998 ----------- ----------- Reconciliation of net income to net cash provided by operating activities Net income $ 3,307 $ 3,308 ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities Depreciation 358 262 Provision for loan losses 411 408 Gain on sale of assets (133) 0 Provision for deferred taxes 0 0 Realized gain on available for sale securities (42) 0 Increase (decrease) in taxes payable 10 (61) (Increase) decrease in interest receivable 138 (117) Increase in interest payable 253 274 Increase in prepaid expenses (290) (269) Increase in accrued expenses 398 529 Amortization and accretion (30) 41 Increase (decrease) in deferred income 5 (6) (Increase) decrease in fees receivable 10 (12) ----------- ----------- Total Adjustments $ 1,088 $ 1,049 ----------- ----------- Net cash provided by operating activities $ 4,395 $ 4,357 =========== =========== Supplemental schedule of non-cash investing activities: Other real estate acquired in settlement of loans 540 0 =========== =========== Unrealized gain (loss) on securities available for sale (1,440) (8) =========== ===========
The accompanying notes are an integral part of these statements 7 VIRGINIA FINANCIAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY SIX MONTHS ENDED JUNE 30, 1998 AND 1999 (IN THOUSANDS OF DOLLARS)
Accumulated Other Common Caital Retained Comprehensive Comprehensive Stock Surplus Earnings Income Income Total ---------- ---------- ---------- ----------- ---------- ---------- Balances, December 31, 1997 20,000 13,554 7,626 155 41,335 Comprehensive income: Net income 3,308 3,308 3,308 Other comprehensive income net of tax, unrealized holding gains arising during the period (net of tax, $2,590) (5) (5) (5) ---------- Total comprehensive income 3,303 ========== Cash dividends ($0.15 per share) (1,200) (1,200) ---------- ---------- ---------- ---------- ---------- Balances, June 30, 1998 20,000 13,554 9,734 150 43,438 ========== ========== ========== ========== ========== Accumulated Other Common Caital Retained Comprehensive Comprehensive Stock Surplus Earnings Income Income Total ---------- ---------- ---------- ---------- ---------- ---------- Balances, December 31, 1998 20,000 13,554 11,434 476 45,464 Comprehensive income: Net income 3,307 3,307 3,307 Other comprehensive income net of tax, unrealized holding (losses) arising during the period (net of tax, $489,525) (950) (950) (950) ---------- Total comprehensive income 2,357 ========== Cash dividends ($0.16 per share) (1,280) (1,280) ---------- ---------- ---------- ---------- ---------- Balances, June 30, 1999 20,000 13,554 13,461 (474) 46,541 ========== ========== ========== ---------- ==========
The accompanying notes are an integral part of these statements 8 VIRGINIA FINANCIAL CORPORATION 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, 1998. In the opinion of the company's management, the financial statements reflect all adjustments necessary to present fairly the results of operations for the six month periods ended June 30, 1999 and 1998, the company's financial position at June 30, 1999 and December 31, 1998, and cash flows for the six month periods ended June 30, 1999 and 1998. These adjustments are of a normal recurring nature. 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, Virginia Financial Corporation (herein after referred to as "the Company"), which will serve as the holding company of the Bank. This transaction was consumated on January 2, 1997. Note 2. Securities as of June 30, 1999 and December 31, 1998 are summarized below.
(IN THOUSANDS OF DOLLARS) June 30, 1999 December 31, 1998 Unrealized Unrealized Book Market Gain (Loss) Book Market Gain (Loss) ---------- ---------- ------------ --------- --------- ------------ Securities Available for Sale U.S. Treasury Securities $ 3,000 $ 3,004 $ 4 $ 11,139 $ 11,254 $ 115 U.S. Agency Securities 40,126 39,926 (200) 48,163 48,646 483 Obligations of State and Political Subdivisions 14,561 14,111 (450) 9,910 10,031 121 Other Securities 6,225 6,152 (73) 8,371 8,373 2 ----------- ----------- ----------- ---------- ---------- ------------ Total Securities Available for Sale $ 63,912 $ 63,193 $ (719) $ 77,583 $ 78,304 $ 721 =========== =========== =========== ========== ========== ============ Securities Held to Maturity U.S. Treasury Securities $ 972 $ 987 $ 15 $ 0 $ 0 $ 0 U.S. Agency Securities 43,766 43,027 (739) 32,190 32,131 (59) Obligations of State and Political Subdivisions 19,137 19,112 (25) 19,798 20,180 382 Other Securities 487 493 6 0 0 0 ----------- ----------- ----------- ---------- ---------- ------------ Total Securities Held to Maturity $ 64,362 $ 63,619 $ (743) $ 51,988 $ 52,311 $ 323 =========== =========== =========== ========== ========== ============
9 VIRGINIA FINANCIAL CORPORATION 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, 1999 December 31, 1998 ------------- ----------------- Real Estate Loans: Construction and Land Development $ 4,419 $ 20,065 Secured by Farm Land 3,698 1,284 Secured by 1-4 Family residential 113,022 113,477 Other Real Estate Loans 73,405 59,752 Loans to Farmers (Except Those Secured by Real Estate) 2,642 2,598 Commercial and Industrial Loans (Except Those Secured by Real Estate) 36,494 37,693 Loans to Individuals for Personal Expenditures 40,285 43,676 All Other Loans 1,535 368 ------------ ------------ Total Loans 275,500 278,913 Less Unearned Income Reflected in Loans 295 344 ------------ ------------ Loans, Net of Unearned Income $ 275,205 $ 278,569 ============ ============
The Bank had loans in a Nonaccrual category of $1,973 on December 31, 1998 and $1,038 on June 30, 1999
Note 4. Allowance for Loan Losses Analysis of the Allowance for Loan Losses For the Six Months Ended June 30, 1999 June 30, 1998 ------------- ------------- Balance at Beginning of Period 3,212 3,753 ------------ ------------ Charge-Offs (469) (637) Recoveries 39 23 ------------ ------------ Net Charge-Offs (430) (614) Provision for Loan Losses 411 408 ------------ ------------ Balance at End of Period $ 3,193 $ 3,547 ============ ============
Note 5. New Accounting Pronouncements In June 1998, The Financial Accounting Standards Board issued Statement No. 133, 'Accounting for Derivative Instruments and Hedging Activities." The Statement establishes accounting and reporting standards for derivative financial instruments and other similar financial instruments and for hedging activities. The Statement also allows securities classified as held-to-maturity to be transferred to the available-for-sale category at the date of initial application of this standard. Statement No 133 is effective for all fiscal years beginning after June 15, 2000. Management is currently reviewing this statement to determine the impact, if any, it will have since the Company does not currently employ such derivative instruments and does not intend to do so in the future. The effects of these Statements on the company's consolidated financial statements are not expected to be material. 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 1999 was $1,618,000 compared to $1,676,000 for the second quarter of 1998. This represents a decrease of $58,000 or 3.46%. Interest income decreased $68,000 and Total Earning Assets increased $74,000, and the yield on average earning assets decreased from 8.04% to 7.70% comparing the second quarter of 1999 to the second quarter 1998. Interest-bearing liabilities increased by $776,000 and interest expense decreased $182,000 comparing the two quarters. The interest spread remained the same comparing the second quarter of 1999 and 1998. Non-interest income increased $405,000 the second quarter of 1999 compared to 1998. This increase was due to increases in fee income, fiduciary income and gains from the sale of available-for-sale securities and other assets. Non-interest expense increased the second quarter of 1999 compared to the second quarter of 1998 by $562,000. This increase was due to increases in salaries and employee benefits and other non-interest operating expenses. Financial Condition - ------------------- Total assets increased $2,956,000 the second quarter of 1999 compared to a decrease of $242,000 the second quarter of 1998. Assets the first six months of 1999 increased $488,000 or 0.11% compared to an increase of $8,590,000 or 2.13% the first six months of 1998. Deposit growth was $531,000 the second quarter of 1999 while it decreased $1,884,000 the second quarter of 1998. Deposits the first six months of 1999 increased $3,964,000 or 1.07% compared to an increase of $9,096,000 or 2.58% the first six months of 1998. The deposit growth in 1999 has been in Money Market Checking and Time Deposits, while in 1998 it was primarily in Time Deposits. The investment portfolio was increased by $2,140,000 the second quarter of 1999 and increased by $9,603,000 the second quarter of 1998. Through the first six months of 1999, investments have decreased $2,737,000 or 2.15% compared to an increase of $3,676,000 or 3.24% the first six months of 1998. The reduction in the investment portfolio along with a decrease in the loan portfolio of $3,364,000 and Cash & Due From Banks of $1,204,000 in 1999 have been used to increase Federal Funds sold by $6,175,000. During the first six months of 1998 the deposit growth and the reduction of the loan portfolio was used to fund investment growth of $3,676,000, Federal Funds sold by $475,000, and reduce the amount of Federal Funds purchased by $4,550,000. Future Operations - ----------------- The Bank opened, effective April 23, 1999, an office at 100 Lucy Lane, Waynesboro, Virginia, providing another full service bank to the Waynesboro area. The Bank has also been continuing its construction of a 4,000 square foot branch located at 1197 North Lee Highway, Lexington, Virginia. The anticipated opening date of this branch is September 15, 1999. Along with the construction of two new branches, the bank has also purchased two other branches located at 9 Lloyd Tolley Road, Natural Bridge Station, Virginia and 2101 Forest Avenue, Buena Vista, Virginia. Planters Bank will begin the operations of these branches on August 20, 1999. The expansion in Waynesboro, Virginia will provide Planters Bank with relief from the overflow of the present office at Poplar and Ohio Street plus serve the southern portion of the city. The expansions in Lexington, Buena Vista, and Natural Bridge Station, Virginia will provide the Bank with a presence in those market areas. Year 2000 - --------- The Year 2000 issue involves the risk that the computer systems may not be able to perform without interruption into the Year 2000. If computer systems do not correctly recognize the date change from December 31, 1999 to January 1, 2000, computer applications that rely on the date field could fail or could create erroneous results. Such erroneous results could affect interest payments or due dates and could cause the temporary inability to process transactions and to engage in ordinary business activities. The failure of the Corporation, its suppliers, and its borrowers to address the Year 2000 issue could have a materially adverse effect on the Corporation's financial condition, results of operations, or liquidity. 11 In 1997, the Corporation initiated a review and assessment of all data processing systems, hardware and software to confirm that it will function properly in the year 2000. Based on this assessment, the Corporation's data processing systems, hardware and banking software are currently Year 2000 compliant. However, testing is required to confirm this. Testing began in the second quarter of 1998 and has continued through the second quarter of 1999. For certain other systems, the Corporation has replaced or modified, or will replace or modify, certain pieces of hardware and/or software so that the systems will properly function in the year 2000. For systems on which the Corporation relies on third party vendors, these vendors have been contacted and have indicated that the hardware and/or software will be Year 2000 compliant. The Corporation has also initiated formal communications with all significant loan customers to determine the extent to which the Corporation is vulnerable to those third parties' failures to remedy their own Year 2000 issues. The Corporation believes that exposure to customers who are not Year 2000 compliant is minimal. The Corporation has completed the majority of the Year 2000 project as of June 30, 1999. To date, the Corporation has expensed $23,403 related to the assessment of, and efforts in connection with, the Year 2000 issue. Remaining expenditures are not expected to have material effects on the Corporation's consolidated financial statements. Part 1 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in information reported as of December 31, 1998, in Form 10-K. 12 VIRGINIA FINANCIAL CORPORATION AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
(000 Omitted) Six Months Ended June 30 1999 1998 Average Income/ Yield/ Average Income/ Yield/ ASSETS Balance Expense Rate Balance Expense Rate ----------- --------- ---------- ----------- --------- -------- Securities: Taxable $ 97,778 $ 2,902 5.94% $ 95,924 $ 2,849 5.94% Tax-exempt (1) 28,985 963 6.64% 16,486 550 6.67% ----------- --------- ---------- ----------- --------- -------- Total Securities $ 126,763 $ 3,865 6.10% $ 112,410 $ 3,399 6.05% Loans (net of earned income): Taxable 271,774 11,584 8.52% 269,342 12,008 8.92% Tax-Exempt (1) 104 3 5.77% 313 10 6.39% ----------- --------- ---------- ----------- --------- -------- Total Loans 271,878 11,587 8.52% 269,655 12,018 8.92% Fed Funds Sold and Repurchase Agreements 6,209 145 4.67% 5,128 139 5.42% ----------- --------- ---------- ----------- --------- -------- Total Earning Assets 404,850 15,597 7.70% 387,193 15,556 8.04% Less Allowance for Loan Losses (3,250) (3,846) Total Nonearning Assets 30,449 25,925 ----------- ----------- Total Assets $ 432,049 $ 409,272 =========== =========== LIABILITIES AND SHAREHOLDER EQUITY Interest bearing deposits: NOW Accounts $ 45,749 $ 574 2.51% $ 42,426 $ 586 2.76% Money Market Savings 55,848 952 3.41% 57,933 1,120 3.87% Regular Savings 37,164 548 2.95% 34,745 512 2.95% Certificates of Deposit: Less than $100,000 146,636 3,769 5.14% 146,267 4,013 5.49% $100,000 and More 26,382 662 5.02% 22,560 616 5.46% ----------- --------- ---------- ----------- --------- -------- Total Interest Bearing Deposits 311,779 6,505 4.17% 303,931 6,847 4.51% Fed Funds Purchased 1,076 24 4.46% 313 10 6.39% Short Term Borrowings 10,210 223 4.37% 5,892 155 5.26% ----------- --------- ---------- ----------- --------- -------- Total Interest Bearing Liabilities 323,065 6,752 4.18% 310,136 7,012 4.52% Noninterest Bearing Liabilities Demand Deposits 60,445 54,265 Other Liabilities 2,237 2,253 ----------- ----------- Total Liabilities 385,747 366,654 Stockholders' Equity 46,302 42,618 ----------- ----------- Total Liabilities and Stockholders' Equity $ 432,049 $ 409,272 =========== =========== Net Interest Income 8,845 8,544 Interest Rate Spread 3.52% 3.52% Interest Expense as a Percent of Average Earning Assets 3.34% 3.62% Net Interest Margin 4.37% 4.41%
(1) Income and yields are reported on a taxable-equivalent basis assuming a federal tax rate of 34% in 1998 and 1999 13 VIRGINIA FINANCIAL CORPORATION PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As of June 30, 1999 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 26, 1999 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 26, 1999 for the Corporation's Annual Meeting of Shareholders held April 26, 1999, filed with the Commission on March 26, 1999. One item was submitted to the shareholders to be voted upon; the election of directors of the company. The votes cast for or against the election of directors of the company were as follows: Name For Against ---- --- ------- Lee S. Baker 3,119,377 734 Benham M. Black 3,117,343 2,768 Harry V. Boney, Jr. 3,112,961 7,150 William P. Heath, Jr. 3,119,887 224 Jan S. Hoover 3,119,031 1,080 Martin F. Lightsey 3,119,887 224 James S. Quarforth 3,117,575 2,536 ITEM 5. NOT APPLICABLE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed during the Quarter ended June 30, 1999. Exhibit 27 See 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 Aug 10, 1999 /s/Fred D. Bowers - ------------------------------- ----------------------------------------- Fred D. Bowers, Secretary/Treasurer (Principal Accounting Officer and Duly Authorized Officer) 15 EX-27 2 EXHIBIT 27
9 0001036070 VIRGINIA FINANCIAL CORPORATION 1,000 6-MOS DEC-31-1999 JAN-1-1999 JUN-30-1999 16,353 0 6,175 0 63,193 64,362 63,619 275,205 3,193 434,628 374,396 11,970 1,721 0 0 0 20,000 26,541 434,628 11,586 3,539 145 15,270 6,505 6,752 8,518 411 42 5,991 4,746 4,746 0 0 3,307 0.83 0.83 0 1,038 401 0 0 3,212 469 39 3,193 2,952 0 241
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