-----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, EBp0OEfDWqhkZKLmlygEl52/5sGG8CxJNgUOzG09GfjyIshJbViXKCrd/44ZUdvh AMdrKmkpNigGGviEKr+BEA== 0000950144-00-004174.txt : 20000331 0000950144-00-004174.hdr.sgml : 20000331 ACCESSION NUMBER: 0000950144-00-004174 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: M&F BANCORP INC /NC/ CENTRAL INDEX KEY: 0001094738 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 561980549 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: SEC FILE NUMBER: 000-27307 FILM NUMBER: 585854 BUSINESS ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27702-3221 BUSINESS PHONE: 9196831521 MAIL ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27701-3221 10KSB40 1 M&F BANCORP, INC. 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1999 Commission File Number 027307 ----------- M&F Bancorp, Inc. - -------------------------------------------------------------------------------- (Name of Small Business Issuer in its charter) North Carolina 56-1980549 - --------------------------------- ---------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 2634 Chapel Hill Blvd. Durham, North Carolina 27707-2800 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (919) 683-1521 -------------------- Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value per share ------------------------------------------------------------------------------- (Title of Class) ------------------------------------------------------------------------------- (Title of Class) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 [ ] Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $12,481,323. The registrant's voting stock is not regularly and actively traded in any established market. Accordingly, the aggregate market value of the voting stock held by nonaffiliates of the registrant is unknown. 2 State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
Outstanding at Class March 17, 2000 ------ --------------- Common stock no par value 853,725 shares
Documents Incorporated by Reference:
Document from which portions Part of Form 10-KSB to are incorporated by reference which incorporated ----------------------------- ----------------------- 1. Annual Report to Shareholders for year Part I - Item 1 ended December 31, 1999 Part II - Items 5, 6 and 7 2. Proxy Statement dated March 21, 2000 Part III - Items 9, 10, 11 and 12
-2- 3 ITEM 1 - DESCRIPTION OF BUSINESS On April 17, 1996, M&F Bancorp, Inc. ("Bancorp"), was incorporated as a North Carolina Corporation. Bancorp also filed an application with the Board of Governors of the Federal Reserve System for prior approval to become a one bank holding company pursuant to Section 3(a)(1) of the Bank Holding Company Act of 1956, as amended. This application was filed on May 17, 1999 and approval was received on June 17, 1999. The holding company commenced operations on September 1, 1999, following approval of a majority of the shareholders of Mechanics & Farmers Bank ("Bank"). As of December 31, 1999, the only subsidiary of M&F Bancorp was Mechanics & Farmers Bank. M&F Bancorp and Mechanics & Farmers Bank are collectively referred to herein as "the Company". The Bank was incorporated under the laws of the State of North Carolina, in 1908. The Bank was approved as a State Bank and is insured by the Federal Deposit Insurance Corporation. The Company had a total of 86 employees as of December 31, 1999. The present area and scope of the Company's activities include providing a full range of banking and related financial services, including commercial banking, consumer banking, and real estate finance. The Company has six traditional branches throughout North Carolina with locations in Durham, Raleigh, Charlotte and Winston-Salem and its main office at 116 W. Parrish Street, Durham, North Carolina. Additionally, these locations are complemented by two limited-service facilities. Additionally, at year end 1999, the Bank's capital ratios reflected total risk based capital ratio at 16.79%, tier 1 risk-based capital ratio at 15.14% and tier 1 leverage ratio at 10.54%. These capital ratios exceed the current regulatory minimum requirements. The Company is focused on serving small/mid-sized businesses and individuals in four metropolitan areas in North Carolina. Charlotte, the largest is located in the southwestern portion of the state. The city is also the corporate headquarters for Bank of America, the largest bank in the United States of America and First Union National Bank. Durham and Raleigh are located in the central area of the state, known as the Research Triangle Park. Both of the metropolitan areas have a high concentration in technology, followed by education and medicine. The fourth area is Winston-Salem, part of the piedmont area of North Carolina. The region has primarily manufacturing. Winston-Salem is corporate headquarters to a large regional bank, Wachovia. The activities in which the Company engages are very competitive. Generally, the Company competes with other banks and nonbank financial institutions located primarily in the metropolitan areas of North Carolina. The principal methods of competition center around such aspects as interest rates on loans and deposits, decision making relationship management, customer services, and other service oriented fee based products. Most of the Company's competitors are major corporations with substantially more assets and personnel than the Company. The Company actively competes for loans and deposits with other commercial banks, brokerage firms, savings and loan associations and credit unions. Consumer finance companies, mortgage brokers, and insurance companies are also significant competitors for various types of loans. There is also active competition for deposits from other banks, trust companies, brokerage firms, investment companies, and others. The Company is headquartered in the southwestern area of Durham. The Company occupies space in the first two floors of the M&F Corporate Center, located at 2634 Chapel Hill Blvd. The Company opened its first Automated Teller Machine (ATM) in 1998 in Winston-Salem. -3- 4 Fourth quarter 1998 the Company entered into an agreement with Nationwide Money Services, Florida to service ATMs in Food Lion Grocery Stores. Under this agreement the Company operates approximately 49 ATM in Food Lion and one at the Swift Creek Amusement Park in Raleigh, North Carolina. The machines are owned by Nationwide Money Services and serviced by M&F Bank in the fee sharing agreement. During 1999, the Company declared dividends of $.525 per share which resulted in a dividend payout ratio of 27.92%. Other information relating to current banking issues and the regulatory environment are addressed in the 1999 Annual Report to Shareholders. -4- 5 The following schedules are provided in accordance with Guide 3 "Statistical Disclosure by Bank Holding Companies." All schedules have been omitted since the required information is either not applicable or is incorporated by reference in the Company's 1999 Annual Report. -5- 6 ITEM 2 - DESCRIPTION OF PROPERTY The Company, located at 2634 Chapel Hill Blvd., Durham, North Carolina occupies a total of 27,000 square feet on the first two floors of the M&F Corporate Center. M&F Corporate Center is owned by Mechanics & Farmers Bank. The facility has a total of 68,000 gross square feet. The remaining footage is leased by other businesses. -6- 7 ITEM 3 - LEGAL PROCEEDINGS None. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. -7- 8 PART II ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The following portion of the Company's 1999 Annual Report to Shareholders is incorporated herein by reference: Common Stock Information Page 13 ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS The following portions of the 1999 Annual Report are herein incorporated by reference. Management's Discussion and Analysis of Results of Operations and Financial Condition on pages 4 through 15. ITEM 7 - FINANCIAL STATEMENTS The following portions of the 1999 Annual Report are incorporated herein by reference. Financial Statements and Report of Independent Auditors on pages 17 through 30. ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 9 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information regarding directors and the information regarding executive officers called for by this item is contained in the sections entitled "Election of Directors" and "Executive Officers" in the Company's proxy statement for its 2000 Annual Meeting of Shareholders, dated March 27, 2000, and is incorporated herein by reference. -8- 9 ITEM 10 - EXECUTIVE COMPENSATION The information called for by this item is contained in the section entitled "Compensation of Management and Other Information" in the Company's proxy statement for its 2000 Annual Meeting of Shareholders, dated March 27, 2000, and is incorporated herein by reference. ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information called for by this item is contained in the section entitled "Stock Ownership" in the Company's proxy statement for its 2000 Annual Meeting of Shareholders dated March 27, 2000, and is incorporated herein by reference. ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information called for by this item is contained in the section entitled "Transactions with Directors and Executive Officers" in the Company's proxy statement for its 1999 Annual Meeting of Shareholders dated March 27, 2000, and is incorporated herein by reference. ITEM 13 - EXHIBITS, LIST AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements The following consolidated financial statements and the Report of Deloitte & Touche, LLP, Independent Certified Public Accountants, are on pages 16 through 30 of the 1999 Annual Report and are incorporated herein by reference. - Consolidated Balance Sheets at December 31, 1999 and 1998 - Consolidated Statements of Income for the Years Ended December 31, 1999, 1998 and 1997 - Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1999, 1998 and 1997 - Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 - Notes to Consolidated Financial Statements -9- 10
(2) Exhibits 1. Not required. 2. Plan of acquisition, reorganization, arrangement, liquidation or succession. None. 3. Articles of Incorporation and By-Laws, incorporated by reference to Exbibit 3 to the Registrant's Quarterly Report Form 10-QSB for the quarter ended September 30, 1999. 4. Instruments defining the rights of security holders, including debentures. None. 5. Not required. 6. Not required. 7. Not required. 8. Not required. 9. Voting Trust Agreement. None. 10. Material Contracts. 10.01 Employment Agreement between Mechanics & Farmers Bank and Julia Taylor dated April 1, 1999, as amended. Incorporated by reference to Exhibit 10.01 to the Registrant's Quarterly Report Form 10-KSB for the quarter September 30, 1999. 10.02 Retention Bonus Agreement between Mechanics & Farmers Bank and Lee Johnson, Jr. dated April 1, 1999. Incorporated by reference to Exhibit 10.03 to the Registrant's Quarterly Report Form 10-QSB for the quarter ended September 30, 1999. 10.03 Retention Bonus Agreement between Mechanics & Farmers Bank and Fohliette W. Becote dated April 1, 1999. Incorporated by reference to Exhibit 10.03 to the Registrant's Quarterly Report Form 10-QSB for the quarter ended September 30, 1999. 10.04 Retention Bonus Agreement between Mechanics & Farmers Bank and Walter D. Harrington dated April 1, 1999. Incorporated by reference to Exhibit 10.03 to the Registrant's Quarterly Report Form 10-QSB for the quarter ended September 30, 1999. 10.05 Retention Bonus Agreement between Mechanics & Farmers Bank and Harold G. Sellars dated April 1, 1999. Incorporated by reference to Exhibit 10.03 to the Registrant's Quarterly Report Form 10-QSB for the quarter ended September 30, 1999. 10.06 Retention Bonus Agreement between Mechanics & Farmers Bank and E. Elaine Small dated April 1, 1999. Incorporated by reference to Exhibit 10.03 to the Registrant's Quarterly Report Form 10-QSB for the quarter ended September 30, 1999.
-10- 11
(2) Exhibits - Continued 11. Statement re computation of per share earnings. 12. Statement re computation of ratios. Not applicable. 13. 1999 Annual Report to Shareholders. 14. Not required. 15. Not required. 16. Letter re change in certifying accountant. Not applicable. 17. Not required. 18. Letter re change in accounting principles. Not applicable. 19. Not required. 20. Not required. 21. Subsidiaries of the registrant. 22. Not required. 23. Consent of experts and counsel. 24. Power of Attorney. 25. Not required. 26. Not required. 27. Financial Data Schedule. 28. Information from reports furnished to state insurance regulatory authorities. Not applicable. 99. Additional Exhibits. None.
(b) Reports on Form 8-K None -11- 12 Pursuant to the requirements of Section 13 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. M&F BANCORP, INC. Principal Executive Officer: /s/ Julia W. Taylor ---------------------------------------------- Julia W. Taylor Chairman, President and Chief Executive Officer Principal Financial Officer: /s/ Lee Johnson, Jr. ---------------------------------------------- Lee Johnson, Jr. Vice President and Principal Financial Officer Dated: March 28, 2000 Julia W. Taylor, pursuant to powers of attorney which are being filed with this Annual Report on Form 10-KSB, has signed this report on March 14, 2000, as attorney-in-fact for the following directors who constitute a majority of the board of directors: Benjamin S. Ruffin Genevia G. Fullbright Joseph M. Sansom Maceo K. Sloan Aaron L. Spaulding Julia W. Taylor /s/ Julia W. Taylor ---------------------------------------------- Julia W. Taylor Attorney-in-fact March 28, 2000 -12- EX-11 2 STATEMENT OF RE COMPUTATION 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS M&F Bancorp, Inc.
Year Ended December 31, ---------------------------------- 1999 1998 1997 ------- ------- -------- Income Per Common Share Basic and Diluted (1) Net income (in thousands) $ 1,071 $ 1,214 $ 1,204 ======= ======= ======== Net income per share $ 1.88 $ 2.13 $ 2.11 ======= ======= ======== Weighted average common shares outstanding 569,213 569,220 569,220 ======= ======= ========
(1) Basic and diluted net income per share has been computed using the weighted average number of common shares outstanding during each year presented as no stock options or stock warrants were outstanding during the three years ended December 31, 1999. See Note K to the Company's consolidated financial statements included in the Annual Report to Shareholders for the year ended December 31, 1999 incorporated herein by reference. EX-13 3 1999 ANNUAL REPORT 1 EXHIBIT 13 M&F BANCORP, INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL HIGHLIGHTS
FOR THE YEAR DECEMBER 31, DECEMBER, 31, INCREASE PERCENT ENDED 1999 1998 (DECREASE) CHANGE - -------------------------------------------------------------------------------------------------------------- INCOME Net Income $ 1,070,517 $ 1,214,024 $ (143,507) (11.82)% Dividends Declared $ 298,836 $ 444,001 $ (145,165) (32.69)% Payout Ratio (Dividends/Net Income) 27.92% 36.57% (8.65)% (23.65)% Return on Average Assets 0.71% 0.87% (0.16)% (18.39)% Return on Average Equity 6.60% 7.64% (1.04)% (13.61)% PER SHARE Net Income $ 1.88 $ 2.13 $ (.25) (11.74)% Cash Dividends Declared $ 0.525 $ 0.78 $ (.255) (32.69)% Book Value $ 28.64 $ 28.98 $ (.34) (1.17)% Average Common Share Outstanding 569,213 569,220 (7) 0 BALANCE SHEET DATA AT YEAR END (THOUSANDS) Assets $ 157,744 $ 153,965 $ 3,779 2.45% Deposits $ 129,529 $ 125,294 $ 4,235 3.38% Loans (net) $ 103,560 $ 94,318 $ 9,242 9.80% Investment Securities $ 32,477 $ 34,162 $ 1,685) (4.93)% Shareholders' Equity $ 16,299 $ 16,497 $ (198) (1.20)%
ANNUAL MEETING: The Annual Meeting of Shareholders of M&F Bancorp, Inc. a North Carolina Corporation, will be held in the auditorium of the Sheraton Imperial Hotel and Towers, Imperial Center, I-40 exit at Page Road, Research Triangle Park, NC on Wednesday, May 3, 2000 at 10:00 a.m. All shareholders are cordially invited to attend. TRANSFER AGENT: American Stock Transfer & Trust Company, 40 Wall Street, New York, N. Y. 10005, Telephone 1-800-937-5449. FORM 10-KSB: ON THE WRITTEN REQUEST OF ANY SHAREHOLDER OF RECORD AS OF MARCH 17, 2000, THE COMPANY WILL PROVIDE TO SAID SHAREHOLDER, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND ALL SCHEDULES AS REQUIRED TO BE FILED WITH THE SECURITY EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934. ALL REQUESTS SHOULD BE SENT TO: MS. J. W. TAYLOR, CHAIRMAN, PRESIDENT/CEO, M&F BANCORP, INC., POST OFFICE BOX 1932, DURHAM, NORTH CAROLINA 27702-1932. For additional information about M&F Bancorp, Inc., please contact Ms. J. W. Taylor, Chairman, President/CEO or Lee Johnson, Jr., Vice President at 919-683-1521. 2 TABLE OF CONTENTS A Message To Our Shareholders...................................... Management's Discussion And Analysis............................... Report of Deloitte & Touche LLP.................................... Financial Statements............................................... Board of Directors and Management.................................. 3 A MESSAGE TO OUR SHAREHOLDERS Nineteen ninety-nine was one of the most significant years in our history, particularly from the standpoint of our many accomplishments. In a year of widespread concerns about year 2000 ("Y2K") disruptions, we completed 1999 with no Y2K related problems and with minimal expenses. Additionally, we established a holding company, achieved solid financial results, moved into a new headquarters facility, upgraded existing facilities and expanded a number of service and product offerings. ESTABLISHED HOLDING COMPANY A significant event in 1999 was the creation of our holding company, M&F Bancorp, Inc. (the "Company"). Our shareholders accepted the Board of Directors' recommendation to establish a holding company for several reasons. First, it will enable the Company to offer certain nonbank services, such as investments and insurance. The holding company will also facilitate the implementation of certain shareholder value enhancement initiatives, such as stock repurchases, should we elect to adopt such strategy. Finally, it will enable the Company to expand, should it elect to pursue an external growth strategy. ACHIEVED STRONG FINANCIAL RESULTS Financially, 1999 was an excellent year. While 1999's reported net income declined relative to 1998's level, most of that shortfall resulted from the impact of the sale of our former headquarters facility which is located in downtown Durham. Excluding the impact of this sale, net earnings in 1999 would have been $1,268,000, net of federal income taxes, or $2.23 per share, versus $1,214,000, or $2.13 per share, in 1998. We attained solid growth in both net interest income and other income. We are pleased with our financial performance, particularly given the upgrade of facilities and the enhancement of the Bank's overall technological capabilities. REINVESTED IN DOWNTOWN DURHAM Our decision to sell our headquarters building was in some ways difficult. However, as Mechanics and Farmers Bank (the "Bank") grew, its space requirements expanded as well, and the old facility was simply not adequate to meet our growing needs. The building was sold to the North Carolina Institute of Minority Development, an organization that assists minority businesses through planning, capital formation and other advisory services. Mechanics and Farmers Bank made a significant contribution to the organization to help make this sale possible. While this contribution facilitated the sale and will support the efforts of the North Carolina Institute of Minority Development, we view it also as an investment in downtown Durham. As part of our agreement with the North Carolina Institute of Minority Development, we negotiated a lease allowing our branch to remain at that location and to retain our name on the facade of the building. We feel that by having the North Carolina Institute of Minority Development in our former location, it will support downtown Durham, provide a valuable resource to minority businesses and may even provide the Bank with a new source of commercial customers. MOVED INTO OUR NEW HOME OFFICE AND UPGRADED OUR CHARLOTTE OFFICES In October 1999, we moved into our new headquarters, located at 2634 Chapel Hill Boulevard in Durham, North Carolina. This building, purchased in early 1999, provides us with ample room for growth. We currently occupy approximately 40% of the building, with most of the remainder leased to other businesses. We anticipate that the building will be fully leased in the very near future. This building is located in a rapidly growing section of town and is very accessible. Our main office in Charlotte was remodeled in the latter part of the year, greatly enhancing the attractiveness and functionality of the facility. The feedback from customers and employees on the remodeling and renovation has been most gratifying. 4 DEVELOPED NEW TECHNOLOGY-BASED SERVICES Nineteen ninety-nine was also a year in which we continued to expand many of our technology-based products and service offerings. Among the products that we introduced during the year was Internet banking, which can be used by customers to pay bills, transfer funds and view account information. We also introduced E-Statements, electronic versions of monthly statements with check images, which are delivered via e-mail. Additional products introduced in 1999 were Intercheck and Intracheck. Both of these products provide paid check images online for the previous twelve months. Intercheck gives the customer dynamic research capability, while Intracheck provides our staff members the necessary tools to respond quickly to customers' inquiries. Technology will also enable us to reduce fraud and improve account security. For example, Positive Pay, which is a check verification service, compares check data that has been transferred to the Bank by customers against actual checks presented to the Bank for payment. Finally, we have upgraded our telephone banking service and promoted our CD-ROM statement, which allows businesses to efficiently store and retrieve statements and checks, in addition to allowing for more efficient research capabilities. SUPPORTED SHAREHOLDER VALUE While bank equities in general were quite weak in 1999, we were gratified that our stock price remained stable throughout the year. We attribute our relatively strong performance to the confidence and loyalty of our shareholders, as well as our commitment to improving the fundamentals of the Bank. In support of building shareholder value, the Board of Directors of M&F Bancorp, Inc., declared a three-for-two stock split, accounted for as a 50 percent dividend. This action was taken by the Board at its December meeting and payment was made on January 21, 2000. We will continue to manage this Company with the maximization of long-term shareholder value as the overriding objective. OUTLOOK The new millennium truly brings with it a new way of conducting business - one that combines technology with service. Our strategy will continue to emphasize investing in technologies that enhance our service capabilities, increase employee productivity and improve product quality. This strategy has served us well, as we now have a diverse portfolio of technology-based products and services that are among the best offered by community banks. The breadth of our service offerings will also continue to expand, as evidenced by our plans to begin a full service brokerage operation during 2000. At the same time, we will continue to stress the importance of high quality-personalized service in each of our branches. We appreciate the confidence expressed through your investment and, as always, we welcome your thoughts and suggestions. Sincerely, /s/ J.W. Taylor (Ms.) J. W. Taylor Chairman, President and CEO 5 FIVE-YEAR SUMMARY Financial Condition Data at December 31,
1999 1998 1997 1996 1995 Assets $157,744,370 $153,965,311 $130,900,038 $124,935,462 $124,885,904 Loans receivable, net 103,559,855 94,317,569 89,237,575 80,099,979 72,542,172 Mortgage-Backed Securities 5,960,507 4,263,843 2,846,138 3,328,901 3,926,092 Securities 26,516,707 29,898,459 28,265,093 26,956,868 29,032,870 Deposits 129,529,153 125,293,823 113,341,772 108,407,264 109,413,008 Other Borrowings 10,000,000 10,000,000 Shareholders' Equity 16,299,350 16,496,856 15,522,972 14,445,365 13,631,114 Operating Data for the Years Ended December 31, 1999 1998 1997 1996 1995 Operating Income: Interest and Fees on Loans $ 8,728,643 $ 8,530,296 $ 7,760,853 $ 7,134,159 $ 6,820,000 Interest on Federal Funds Sold 258,813 223,709 234,271 281,434 326,799 Interest and Dividends on Investments 1,871,187 1,685,786 1,704,379 1,820,025 1,638,155 Other Income 1,622,680 1,560,954 1,468,354 1,404,665 1,296,043 ------------ ------------ ------------ ------------ ------------ Total Operating Income $ 12,481,323 $ 12,000,745 $ 11,167,857 $ 10,640,283 $ 10,080,997 ============ ============ ============ ============ ============ Operating Expense: Interest on Deposits $ 3,585,065 $ 3,353,961 $ 3,086,978 $ 3,096,740 $ 2,932,085 Personnel Costs 3,752,317 3,626,314 3,260,252 3,173,623 2,986,552 Provision for Loan Losses 244,305 392,035 206,131 146,128 257,868 Other Expenses 3,476,119 2,958,912 2,877,688 2,550,379 2,462,520 ------------ ------------ ------------ ------------ ------------ Total Operating Expense $ 11,057,806 $ 10,331,222 $ 9,431,049 $ 8,966,870 $ 8,639,025 ============ ============ ============ ============ ============ Income Before Taxes $ 1,423,517 $ 1,669,523 $ 1,736,808 $ 1,673,413 $ 1,441,972 Income Tax Expense 353,000 455,499 533,000 475,000 388,000 ------------ ------------ ------------ ------------ ------------ Net Income $ 1,070,517 $ 1,214,024 $ 1,203,808 $ 1,198,413 $ 1,053,972 ============ ============ ============ ============ ============ Per Share Data: Net Income - basic and diluted $ 1.88 $ 2.13 $ 2.11 $ 2.11 $ 1.85 1 Cash Dividends Declared $ 0.53 $ 0.78 $ 0.74 $ 0.74 $ 0.74 Weighted-Average Common Shares Outstanding 569,213 569,220 569,220 569,220 569,220
6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS DESCRIPTION OF BUSINESS Based in Durham, North Carolina, M&F Bancorp, Inc. is the holding company for Mechanics and Farmers Bank, a state chartered commercial bank that was organized in 1907. The holding company was established in 1999 through a tax-free exchange of M&F Bancorp, Inc. common stock for existing shares of Mechanics and Farmers Bank common stock. The Bank provides a broad range of financial products and services through eight offices located in the markets below: NUMBER OF MARKET BRANCHES ------ -------- Durham 3 Raleigh 2 Charlotte 2 Winston-Salem 1 SUMMARY The following discussion, analysis of earnings and related financial data should be read in conjunction with the audited financial statements and related notes to the consolidated statements. It is intended to assist you in understanding the financial condition and the results of operations for the years 1999, 1998, and 1997 for the Company and its subsidiary. FORWARD-LOOKING STATEMENTS When used in the Annual Report, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or other similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Bank's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Bank's market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Bank's financial performance and could cause the Bank's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or occurrences after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. ASSET LIABILITY MANAGEMENT Asset Liability management activities are designed to ensure long-term profitability, minimize risk, and maintain adequate liquidity and capital levels. It is the responsibility of the Asset Liability Committee to set policy guidelines and to establish long-term strategies with respect to interest rate exposure and liquidity. The Committee, which is comprised of the Bank's executive management and one outside director, meets regularly to review the Bank's interest rate and liquidity risk exposures in relation to present and anticipated market and business conditions. The committee also establishes funding and balance sheet management strategies that are intended to assure that the potential impact on earnings and liquidity are within acceptable levels. Asset Liability management is achieved through comprehensive planning processes, month-to-month analysis, yearly budgeting and long-range planning. Specific consideration is given 7 to many variables, including but not limited to, interest rates, balance sheet volumes and maturities of both the earning assets and all deposit categories and borrowings. The interest rate sensitivity schedule is reflected in Table 1, Rate Sensitivity Analysis. This table reflects the Bank's interest sensitivity analysis as of December 31, 1999 and describes, at various cumulative intervals, the gap ratios (ratios of rate-sensitive assets to rate-sensitive liabilities) for assets and liabilities that management considers rate sensitive. When interest sensitive assets exceed interest sensitive liabilities, a positive interest sensitive gap results. This gap shows the additional amount of assets being repriced over interest sensitive liabilities. The gap is negative when the reverse situation occurs. As of December 31, 1999, the one-year cumulative interest sensitivity gap was negative $55,590,000 versus negative $45,407,000 at December 31, 1998; the ratio of the cumulative interest sensitivity gap as a percent of total earning assets was a negative 37.81 percent as of December 31, 1999, compared with a negative 31.40 percent as of December 31, 1998. This incremental change was due to an increase in interest sensitive liabilities which exceeded the growth in interest sensitive assets with maturities within the twelve month period. Investment securities decreased $4,268,000 and Fed Funds declined $8,450,000. Increased loan demand resulted in the decrease in the securities portfolio. Federal funds are temporary funds and subject to increases or decreases at any time. Interest bearing liabilities increased $2,044,000 within the twelve month period compared with 1998. LIQUIDITY Liquidity reflects the Bank's ability to meet its funding needs, which include the extension of credit, meeting deposit withdrawals, and generally to sustain operations. In addition to its level of liquid assets, many other factors affect a bank's ability to meet liquidity needs, including access to additional funding sources, total capital position and general market conditions. Because a large proportion of bank deposits are payable upon demand, banks must protect themselves against liquidity risk through the maintenance of adequate funds which are liquid, or can readily be converted into liquid assets. The Bank has not experienced a liquidity problem in the past, nor does it anticipate any problem in the future. The Bank will continue to rely primarily on deposits and funds provided from operations as its principal sources of funding. However, as competition for deposits increases, the Bank will seek other sources of funds to replace these deposits. The Bank will utilize the Federal Home Loan Bank as a secondary source of funds. This source of funds was very instrumental in assisting the Bank in maintaining its liquidity throughout much of 1999. The Bank received periodic advances from the Federal Home Loan Bank during the year. Total deposits were approximately $129,529,000 at December 31, 1999, with core deposits (deposits excluding certificates of deposits of $100,000 or more) of approximately $115,958,000. These figures compare to respective figures of $125,294,000 and $110,041,000 as of December 31, 1998. On December 31, 1999, the Bank's liquidity ratio was 30.31 percent, which exceeds all regulatory requirements. 1999 COMPARED WITH 1998 OPERATING INCOME Net interest income after the provision for possible loan losses was $7,029,273 for the year ended December 31, 1999, an increase of $335,478, or 5.01 percent, from the 1998 level of $6,693,795. Provisions for possible loan losses decreased $147,730 from the prior year's amount of $392,035 to $244,305, a decrease of 37.68 percent. This decrease is primarily attributable to the Bank's lower level of write-offs in 1999 relative to 1998. Interest and fees on loans increased $198,347, or 2.33 percent, resulting in total interest income of $10,858,643. Loan growth primarily contributed to this improvement. Interest and dividends on investment securities were $1,871,187, an 11.00 percent increase from the $1,685,786 earned in 1998. The increase was primarily attributable to an increase in the average balance on non-taxable securities. Interest on federal funds sold increased to $258,813 in 1999 from $223,709 in 1998, which represented growth of 15.69 percent. 8 Service charges on deposit accounts increased 3.49 percent to $1,226,591 from $1,185,246 in 1998. Income from other categories was $399,059, an increase of 6.22 percent from $375,708 in 1998. Changes in other miscellaneous income are included in this income category and, therefore, subject this account to wide fluctuations. OPERATING EXPENSES Interest expense from deposits decreased $112,903 to $3,104,429 in 1999, a 3.51 percent decrease from interest expense on deposits of $3,217,332 in 1998. Interest on borrowed funds increased $344,007 from the 1998 level of $l36,629 or 251.78 percent. The increase in this account compared with 1998 is due do a full twelve months of interest expense on the ten million dollar advance from the Federal Home Loan Bank at 4.64 percent with a scheduled maturity of October 8, 2008. Other Expenses, which are primarily comprised of noninterest expense items, increased 9.77 percent to $7,228,436 from $6,585,226 in 1998. Personnel costs, which include salaries, bonuses and employee benefits, increased 3.47 percent to $3,752,317 from $3,626,314 in 1998. Occupancy expense decreased $67,989 or 11.28 percent from the level in 1998. Equipment expense of $572,455 reflected an increase of 12.87 percent from $507,176 in 1998. Upgrades in equipment and ATM service contracts contributed to increased maintenance costs during the year. Data processing expense decreased 7.14 percent to $429,767 in 1999, with that decrease largely related to the Bank's decreased expenditures on technology-based products and services. Contributions increased $195,032 to $222,541 in 1999 from $27,509 in 1998. The increase in contributions was primarily attributable to a donation made to the North Carolina Institute of Minority Development to facilitate the sale of the Bank's former home office building located at 114-116 W. Parrish Street, Durham, North Carolina. Other expenses increased 17.84 percent to $1,346,939 in 1999 from $1,143,036 in 1998. This category is comprised of many other operating expense accounts that had minor increases or decreases, the net of which represents the increase in the other expense category. Several component accounts within this category had significant increases. The loss on the sale of the corporate building resulted in an expense of $97,000; losses from teller transactions and forged checks totaling $61,000 and other losses $25,000. 1998 COMPARED WITH 1997 OPERATING INCOME Net interest income after the provision for possible loan losses was $6,693,795 for the year ended December 31, 1998, an increase of $287,401, or 4.49 percent, from the 1997 level of $6,406,394. Provisions for possible loan losses increased $185,904 from the prior year's amount of $206,131 to $392,035, an increase of 90.19 percent. This increase is attributable to the Bank's higher level of delinquencies and write-offs in 1998 relative to 1997, as well as to the growth in the loan portfolio in general. Interest and fees on loans increased $769,443, or 9.91 percent, resulting in total interest income of $10,439,791. Loan growth primarily contributed to this improvement. Interest and dividends on investment securities were $1,685,786, a 1.09 percent decrease from the $1,704,379 earned in 1997. The decrease was primarily attributable to a decline in rates earned on taxable securities and a decrease in the average balance on taxable securities. Interest on federal funds sold decreased to $223,709 in 1998 from $234,271 in 1997, due to a lower average balance of federal funds sold. Service charges on deposit accounts decreased 2.34 percent to $1,185,246 from $1,213,618 in 1997. Income from other categories was $375,708, an increase of 50.12 percent from $250,273 in 1997. Changes in other miscellaneous income are included in this income category and, therefore, subject this account to wide fluctuations. OPERATING EXPENSES Interest expense from deposits increased $130,354 to $3,217,332 in 1998, a 4.22 percent increase from interest expense on deposits of $3,086,978 in 1997. Interest expense on other borrowings funds for 1998 was $136,629. There was no interest expense on other borrowings during 1997. Other Expenses, which are primarily comprised of noninterest expense items, increased 7.29 percent to $6,585,226 from $6,137,940 in 1997. Personnel costs, which include salaries, bonuses and employee benefits, increased 11.23 percent to $3,626,314 from $3,260,252 in 1997. Occupancy expense increased $32,974 or 5.79 percent from the level in 9 1997. Equipment expense of $507,176 reflected a decrease of 4.34 percent from $530,200 in 1997. Data processing expense increased 3.10 percent to $462,829 in 1998, with that increase largely related to the Bank's investment in technology-based products and services. Other expenses increased 4.35 percent to $1,143,036 in 1998 from $1,095,408 in 1997. This category is comprised of many other operating expense accounts which had minor increases or decreases, the net of which represents the increase in the other expense category. During periods of rising interest rates, the Bank's rate-sensitive assets cannot be repriced as quickly as its rate sensitive liabilities. Thus, the Bank's net interest income will generally increase. In periods of declining interest rates, the opposite effect occurs. TABLE 1. RATE SENSITIVITY ANALYSIS
3 MONTHS 4 TO 12 TOTAL WITHIN OVER (Dollars In Thousands) or Less Months 12 Months 12 Months Total - ------------------------------------------------------------------------------------------------------------------------------- INTEREST EARNING ASSETS Loans $ 24,128 $ 2,711 $ 26,839 $ 78,404 $105,243 Investment Securities 1,718 1,718 30,759 32,477 Federal Funds Sold 5,100 5,100 5,100 Interest-Bearing Deposits 4,187 4,187 4,187 -------- -------- -------- -------- -------- Total Interest-Earning Assets $ 33,415 $ 4,429 $ 37,844 $109,163 $147,007 ======== ======== ======== ======== ======== Percent of Total Interest-Earning Assets 22.73% 3.01% 25.74% 74.26% 100.00% Cumulative Percent of Total Interest Earning-Assets 22.73% 25.74% 25.74% 100.00% Interest-Bearing Liabilities Time Deposits $100,000 or More $ 7,562 $ 4,441 $ 12,003 $ 1,263 $ 13,266 Savings, Now and Money Market Deposits 60,210 60,210 60,210 Other Time Deposits 8,249 12,972 21,221 6,249 27,470 Borrowed Funds 10,000 10,000 -------- -------- -------- -------- -------- Total Interest-Bearing Liabilities $ 76,021 $ 17,413 $ 93,434 $ 17,512 $110,946 ======== ======== ======== ======== ======== Percent of Total Interest-Bearing Liabilities 68.52% 15.70% 84.22% 15.78% 100.00% Cumulative Percent of Total Interest-Bearing Liabilities 68.52% 84.22% 84.22% 100.00% Ratio of Interest-Earning Assets to Interest-Bearing Liabilities (Gap Ratio) 43.95% 25.44% 40.50% 623.36% Cumulative Ratio of Interest-Earning Assets to Interest-Bearing Liabilities (Cumulative Gap Ratio) 43.95% 40.50% 40.50% 132.50% Interest Sensitivity Gap $(42,606) $(12,984) $(55,590) $ 91,651 $ 36,061 Cumulative Interest Sensitivity Gap $(42,606) $(55,590) $(55,590) $ 36,061 $ Cumulative Interest Sensitivity Gap as a Percent of Total Interest-Earning Assets (28.98)% (37.81)% (37.81)% 24.53%
10 TABLE 2. AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS
(Dollars in Thousands) Year Ended December 31, - ----------------------------------------------------------------------------------------------------------------------------- 1999 1998 1997 - ----------------------------------------------------------------------------------------------------------------------------- Amount AMOUNT AMOUNT Average Average Paid or Average Average Paid or Average Average Paid or BALANCE RATE EARNED BALANCE RATE EARNED BALANCE RATE EARNED ASSETS LOANS (1) $ 97,472 8.96% $ 8,729 $ 95,767 8.91% $ 8,530 $ 85,465 9.08% $7,761 TAXABLE SECURITIES 22,654 5.97% 1,353 23,653 5.96% 1,409 26,398 5.84% 1,542 NON-TAXABLE SECURITIES (2) 11,428 4.53% 518 6,009 4.61% 277 3,498 4.63% 162 FEDERAL FUNDS SOLD 3,694 4.76% 176 3,702 5.21% 193 4,486 5.24% 235 INTEREST-BEARING DEPOSITS 2,046 4.06% 83 597 5.19% 31 8 0.00% -------- ---- ------- -------- ---- ------- -------- ---- ------ TOTAL INTEREST-EARNING ASSETS 137,294 7.91% 10,859 129,728 8.05% 10,440 119,855 8.09% 9,700 -------- ------- -------- ------- -------- ------ CASH AND DUE FROM BANKS 5,477 4,976 4,190 BANK PREMISES & EQUIPMENT, NET 4,959 2,580 2,341 OTHER ASSETS 3,339 2,247 2,225 -------- ------- -------- ------- -------- ------ TOTAL ASSETS $151,069 $10,859 $139,531 $10,440 $128,611 $9,700 ======== ======= ======== ======= ======== ====== LIABILITIES AND SHAREHOLDERS EQUITY INTEREST-BEARING DEPOSITS $ 97,264 $ 3,104 $ 93,444 $ 3,217 $ 88,857 $3,087 BORROWED FUNDS 10,045 481 2,786 137 -------- ------- -------- ------- -------- ------ TOTAL INTEREST-BEARING LIABILITIES 107,309 3.34% 3,585 96,230 3.49% 3,354 88,857 3.47% 3,087 NONINTEREST-BEARING DEPOSITS 25,103 24,598 23,408 OTHER LIABILITIES 2,437 2,811 1,429 SHAREHOLDERS EQUITY 16,220 15,892 14,917 -------- ------- -------- ------- -------- ------ TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $151,069 $ 3,585 $139,531 $ 3,354 $128,611 $3,087 -------- ------- -------- ------- -------- ------ NET INTEREST INCOME AND NET YIELD ON INTEREST-EARNING ASSETS 5.30% $ 7,274 5.46% $ 7,086 5.59% $6,697 INTEREST RATE SPREAD 4.57% 4.56% 4.62%
1 Average loans, net of the allowance for possible loan losses and unearned income. These figures include non-accrual loans, the effect of which is to lower the average rates. 2 Yields on tax-exempt investments have been adjusted to a taxable-equivalent basis using prevailing federal and state rates. 11 TABLE 3. VOLUME AND RATE VARIANCE ANALYSIS
(DOLLARS IN THOUSANDS) 1999 COMPARED TO 1998 1998 COMPARED TO 1997 - --------------------------------------------------------------------------------------------------------------------------- Volume Rate Total Volume Rate Total - --------------------------------------------------------------------------------------------------------------------------- INTEREST-BEARING ASSETS LOANS $ 806 $(608) $ 198 $ 449 $ 320 $ 769 TAXABLE SECURITIES (102) 46 (56) 160 (294) (134) NON-TAXABLE SECURITIES 38 203 241 55 60 115 FEDERAL FUNDS SOLD 59 (24) 35 (10) (1) (11) ----- ----- ----- ----- ----- ----- INTEREST INCOME $ 801 $(383) $ 418 $ 654 $ 85 $ 739 ===== ===== ===== ===== ===== ===== INTEREST-BEARING LIABILITIES TIME DEPOSITS $100M OR MORE $ (78) $ 225 $ 147 $ 235 $(156) $ 79 SAVINGS, NOW, AND MONEY MARKET DEPOSIT 106 (192) (86) 64 (89) (25) OTHER TIME DEPOSITS 48 (222) (174) (22) 98 76 OTHER BORROWINGS 347 (3) 344 69 68 137 ----- ----- ----- ----- ----- ----- TOTAL INTEREST-BEARING LIABILITIES $ 423 $(192) $ 231 $ 346 $ (79) $ 267 ===== ===== ===== ===== ===== =====
The rate/volume variance for each category has been allocated on a consistent basis between rate and volume variances based on the percentage of the rate or volume variance to the sum of the two absolute variances. INVESTMENT SECURITIES The investment portfolio is managed to provide a balance between liquidity and attractive yields. An increasing amount of emphasis is being placed on managing the interest rate risk of the Bank. Therefore, future investment activity will be guided by the asset liability mix and maturity requirements of the Bank. The investment portfolio is categorized as "available for sale" and "held to maturity." The available for sale portion of the portfolio can be used to meet the liquidity needs of the Bank, while the held to maturity portion is intended primarily for investment. On December 31, 1999, $30,390,000 or 93.57 percent of the Bank's portfolio was classified as available for sale. Bank policy prohibits trading within the portion of the bond portfolio classified as "securities to be held to maturity." Additionally, more of the bonds in the "available for sale" portfolio have maturities of five years or greater and, therefore these securities are subject to greater market volatility than similar securities with maturities of two years or less. Market value adjustment caused by increases or decreases in interest rates presents the potential for a greater amount of market value adjustment to the Bank's capital account. Tables 4 and 4.1 show maturities of investment securities held by the Bank at December 31, 1999, and 1998, respectively, along with weighted average yields. LOAN PORTFOLIO Total loans outstanding on December 31, 1999 were $105,243,103, an increase of 9.85 percent from the $95,804,295 in loans at December 31, 1998. Competition for loan originations remained intense in our markets in 1999, with many institutions targeting M&F's traditional markets because of their need to improve their community reinvestment ratings. M&F Bank's increase in total loans outstanding was due to marketing to small businesses, churches and loan participations with other banks. The Bank maintains a diversified mix of loans, as can be seen in the table below. Commercial loans are spread throughout a variety of industries, with loans to churches accounting for approximately 46 percent of the commercial loan portfolio and no other particular industry group or related industries accounting for a significant portion of the commercial loan portfolio. Real estate loans consist of mortgages for construction, land development, residential and other properties. 12 TABLE 4. INVESTMENT PORTFOLIO MATURITY SCHEDULE 1999
After One After Five Amortized Cost Year But Years But (Dollars In Thousands) Within One Year Within Five Years Within Ten Years After Ten Years - ------------------------------------------------------------------------------------------------------------------- Amount Yield Amount Yield Amount Yield Amount Yield - ------------------------------------------------------------------------------------------------------------------- US TREASURY $ 500 6.18% $ 500 6.65% $ .00% $ .00% US GOVERNMENT AGENCIES 1,000 5.08% 8,249 5.93% MORTGAGE-BACKED SECURITIES 6,035 6.23% STATE AND POLITICAL SUBDIVISIONS (1) 226 6.99% 1,387 7.69% 3,807 7.62% 6,031 7.09% CORPORATE 4,133 7.59% OTHER 689 ------ ---- ------- ---- ------ ---- ------- ---- TOTAL $1,726 5.70% $10,136 6.20% $3,807 7.62% $16,888 6.36% ====== ==== ======= ==== ====== ==== ======= ====
(1) Yield on tax-exempt investments has been adjusted to a taxable-equivalent basis using prevailing federal and state rates. TABLE 4.1 INVESTMENT PORTFOLIO MATURITY SCHEDULE 1998
After One After Five Amortized Cost Year But Years But (Dollars In Thousands) Within One Year Within Five Years Within Ten Years After Ten Years - --------------------------------------------------------------------------------------------------------------------- Amount Yield Amount Yield Amount Yield Amount Yield - --------------------------------------------------------------------------------------------------------------------- US TREASURY $ 4,501 6.44% $ 1,998 6.69% $ $ 0.00% US GOVERNMENT AGENCIES 1,500 5.76% 5,752 6.65% MORTGAGE-BACKED SECURITIES 4,240 6.24% STATE AND POLITICAL SUBDIVISIONS(1) 226 6.80% 759 7.15% 3,980 7.43% 5,195 7.01% CORPORATE 4,107 6.69% OTHER 514 ------- ---- ------- ---- -------- ---- ------- ---- TOTAL $ 6,227 6.29% $ 8,509 6.78% $ 3,980 7.43% $14,056 6.42% ======= ==== ======= ==== ======== ==== ======= ====
(1) Yield on tax-exempt investments has been adjusted to a taxable-equivalent basis using prevailing federal and state rates. As of December 31, 1999, approximately $57,654,000, or 54.78 percent of the loan portfolio, was comprised of commercial, financial and agricultural loans, an increase from the 53.93 percent in the same category at the end of 1998. Real estate mortgages also represented a lower percentage, totaling 33.34 percent of the loan portfolio, down from 38.09 percent at the end of 1998. The remaining categories of loans, real estate construction and installment loans to individuals, represented 4.60 percent and 7.28 percent, respectively, of the loan portfolio as of December 31, 1999 (comparable respective figures for 1998 were 0.78 percent and 7.20 percent). The Bank has no foreign loans. Loans made to directors, 13 officers and other related parties to the Bank totaled $1,090,000 at December 31, 1999. New loans to such parties totaled $370,000 while repayments totaled $22,000 during 1999. At December 31, 1999, the Bank had outstanding loan commitments of approximately $23,381,000, versus $18,277,000 at the end of 1998. Historically, only a small percentage of these lines have been activated. Management does not believe these lines will have any impact on the liquidity of the Bank. The amount of loans outstanding and the percentage that such loans represented of total loans at the indicated dates are shown in the following table according to the loan type. Total fixed rate loans maturing after one year on December 31, 1999 were $78,404,000 and total floating rate loans were $21,586,000. TABLE 5. LOAN PORTFOLIO COMPOSITION
(DOLLARS IN THOUSANDS) DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------ 1999 % 1998 % 1997 % 1996 % 1995% % COMMERCIAL, FINANCIAL, AND AGRICULTURAL $ 57,654 54.78% $ 51,665 53.93% $ 41,910 46.22% $ 39,511 48.35% $ 34,587 46.61% REAL ESTATE- CONSTRUCTION 4,844 4.60% 747 0.78% 3,495 3.85% 473 0.58% 2,145 2.89% REAL ESTATE- MORTGAGE 35,087 33.34% 36,493 38.09% 38,010 41.92% 34,599 42.34% 31,002 41.79% INSTALLMENT LOANS TO INDIVIDUALS 7,658 7.28% 6,899 7.20% 7,261 8.01% 7,132 8.73% 6,464 8.71% -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ TOTAL $105,243 100.00% $ 95,804 100.00% $ 90,676 100.00% $ 81,715 100.00% $ 74,198 100.00% ======== ====== ======== ====== ======== ====== ======== ====== ======== ======
TABLE 6. LOAN MATURITIES-FIXED RATES
AFTER ONE YEAR ONE YEAR THROUGH AFTER FIXED RATES (DOLLARS IN THOUSANDS) OR LESS FIVE YEARS FIVE YEARS TOTAL - ---------------------------------------------------------------------------------------------------------- COMMERCIAL, FINANCIAL, AND AGRICULTURAL $ 2,454 $31,540 $ 9,614 $43,608 REAL ESTATE-CONSTRUCTION 317 317 REAL ESTATE-MORTGAGE 1,390 14,623 18,863 34,876 INSTALLMENT LOANS TO INDIVIDUALS 1,090 3,632 134 4,856 ------- ------- ------- ------- TOTALS $ 5,251 $49,795 $28,611 $83,657 ======= ======= ======= =======
TABLE 6.1 LOAN MATURITIES-FLOATING RATES
AFTER ONE YEAR ONE YEAR THROUGH AFTER FLOATING RATES (DOLLARS IN THOUSANDS) OR LESS FIVE YEARS FIVE YEARS TOTAL - ---------------------------------------------------------------------------------------------------------- COMMERCIAL, FINANCIAL, AND AGRICULTURAL $14,046 $ -- $ -- $14,046 REAL ESTATE-CONSTRUCTION 4,527 -- -- 4,527 REAL ESTATE-MORTGAGE 211 -- -- 211 INSTALLMENT LOANS TO INDIVIDUALS 2,802 -- -- 2,802 ------- ------- ------- ------- TOTALS $21,586 $ -- $ -- $21,586 ======= ======= ======= =======
14 NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS A loan is placed on non-accrual status when, in management's judgment, the collection of interest income becomes doubtful. Interest receivable that has been accrued in prior years and is subsequently determined to have doubtful collectability is charged to the appropriate interest income account. Interest on loans that are classified as non-accrual is recognized when received. Past due loans are loans whose principal or interest is past due 90 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original terms. The following table summarizes the Bank's nonaccrual loans, past due loans and restructured loans (nonperforming loans) at the dates indicated. TABLE 7. NON-ACCRUAL, PAST DUE, & RESTRUCTURED LOANS
DECEMBER 31, ---------------------------------------------------------------------- (DOLLARS IN THOUSANDS) 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------- NON-ACCRUAL LOANS $ 518 $ 539 $ 622 $ 97 $ 126 LOANS PAST DUE 90 DAYS OR MORE 1,300 1,163 1,790 1,122 646 RESTRUCTURED LOANS 725 -- -- -- -- ------ ------ ------ ------ ------ TOTAL $2,543 $1,702 $2,412 $1,219 $ 772 ====== ====== ====== ====== ======
At December 31, 1999 and 1998, nonaccrual, past due, and restructured loans were approximately 2.42 percent and 1.78 percent, respectively, of the total loans outstanding on such dates. Nonaccrual loans declined slightly in 1999, although this decline was more than offset by increases in loans past due more than 90 days and restructured loans. Management continues to work towards reducing the level of delinquencies through collection efforts and adherence to sound loan underwriting procedures. However, due to the uncertainties regarding trends in consumer credit and credit worthiness, it is not possible for us to accurately estimate the future impact of charge-offs in any of our loan categories. Charge-offs totaled $171,000 in 1999, or $52,000 net of recoveries. The amount of interest from non-accrual loans that would have been earned for 1999 and 1998, was $63,900 and $50,400, respectively. These amounts are not included in income. Management considers the allowance for possible loan losses adequate to cover loan losses on the loans outstanding as of each reporting period. It must be emphasized, however, that the determination of the allowance using the Bank's procedures and methods rests upon various assumptions such as delinquency ratios, adversely classified loans, five year average charge-off history, loan growth, the current ratio of outstanding loans to the allowance for loan losses and future factors affecting loans. No assurance can be given that the Bank will not, in any particular period, sustain loan losses that are sizable in relation to the amount reserved or that subsequent evaluations of the loan portfolio, in light of conditions and factors then prevailing, will not require significant changes in the allowance for possible loan losses or future charges to earnings. The following table summarizes the Bank's balances of loans outstanding, average loans outstanding, changes in the allowance arising from charge-offs and recoveries by category, and additions to the allowance that have been charged to expense for years 1995 through 1999. 15 TABLE 8. LOAN LOSS AND RECOVERY EXPERIENCE
YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------- (Dollars In Thousands) 1999 1998 1997 1996 1995 TOTAL OUTSTANDING LOANS AT YEAR END $105,243 $ 95,804 $ 90,676 $ 81,715 $ 74,198 AVERAGE AMOUNT OF LOANS OUTSTANDING $ 97,472 $ 95,767 $ 85,465 $ 76,167 $ 72,273 ALLOWANCE FOR POSSIBLE LOAN LOSSES AT BEGINNING OF YEAR $ 1,150 $ 1,089 $ 1,304 $ 1,334 $ 1,137 LOANS CHARGED OFF: COMMERICAL, FINANCIAL & AGRICULTURAL 41 116 93 50 31 REAL ESTATE-MORTGAGE 3 20 3 INSTALLMENT LOANS TO INDIVIDUALS 127 283 326 164 67 -------- -------- -------- -------- -------- TOTAL CHARGE-OFFS $ 171 $ 399 $ 439 $ 214 $ 101 ======== ======== ======== ======== ======== RECOVERIES OF LOANS PREVIOUSLY CHARGED OFF: COMMERICAL, FINANCIAL, AND AGRICULTURAL $ 13 $ 26 $ 5 $ $ REAL ESTATE-MORTGAGE 1 INSTALLMENT LOANS TO INDIVIDUALS 106 42 13 38 39 -------- -------- -------- -------- -------- TOTAL RECOVERIES $ 119 $ 68 $ 18 $ 38 $ 40 ======== ======== ======== ======== ======== NET CHARGE-OFFS $ 52 $ 331 $ 421 $ 176 $ 61 ADDITIONS TO THE ALLOWANCE CHARGED TO EXPENSE 244 392 206 146 258 -------- -------- -------- -------- -------- ALLOWANCE FOR POSSIBLE LOAN LOSSES AT END OF YEAR $ 1,342 $ 1,150 $ 1,089 $ 1,304 $ 1,334 ======== ======== ======== ======== ======== RATIOS OF NET-CHARGE OFFS DURING YEAR TO AVERAGE OUTSTANDING LOANS DURING YEAR 0.05% 0.35% 0.49% 0.23% 0.08%
TABLE 9. ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
% of Loans % of Loans % of Loans % of Loans % of Loans in Category in Category in Category in Category in Category (Dollars in to Total to Total to Total to Total to Total Thousands) Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans - ----------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL, $ 312 54.78% $ 503 53.93% $ 266 46.22% $ 378 48.35% $ 356 46.61% FINANCIAL, AND AGRICULTURAL REAL ESTATE- 15 4.60% 2 0.78% 31 3.85% 5 0.58% 19 2.89% CONSTRUCTION REAL ESTATE- MORTGAGE 299 33.34% 276 38.09% 333 41.92% 380 42.34% 286 41.79% INSTALLMENT LOANS TO INDIVIDUALS 290 7.28% 261 7.20% 317 8.01% 147 8.73% 122 8.71% UNALLOCATED 426 0.00% 108 0.00% 142 0.00% 394 0.00% 551 0.00% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ TOTAL $1,342 100.00% $1,150 100.00% $1,089 100.00% $1,304 100.00% $1,334 100.00% ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
DEPOSITS Total deposits as of December 31, 1999 were approximately $129,529,153 compared to $125,293,823 at the end of 1998, an increase of $4,235,330 or 3.38 percent. Savings accounts, demand deposits, and time deposits of less than $100,000 are considered core 16 deposits by the Bank. The Bank continued its marketing effort to increase this stable source of funds. Core deposits totaled $115,958,000 at the end of 1999, versus $110,041,000 at the end of 1998. Increased efforts to extend the maturities of our deposit structure had minimal impact during 1999. As reflected in Table 1, Rate Sensitivity Analysis, approximately 84.22 percent of interest bearing deposits can be repriced in one year or less. This maturity structure contributes greatly to the negative gap or mismatch of assets and liabilities. The net effect contributes to an increased interest rate risk for the Bank. M&F Bank is committed to offering a wide range of competitively priced deposits. Our savings account rate remained one of the most attractive rates in the market. The average amount of deposits for the years ended December 31, 1999, 1998 and 1997 are summarized below. The Bank has no foreign deposits. TABLE 10. AVERAGE DEPOSITS
YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------------------- 1999 1998 1997 AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE (DOLLARS IN THOUSAND) AMOUNT RATE AMOUNT RATE AMOUNT RATE - ------------------------------------------------------------------------------------------------------------------- INTEREST-BEARING DEMAND DEPOSITS $ 21,127 0.60% $ 20,082 0.97% $ 20,195 1.47% SAVINGS DEPOSITS 34,024 3.09% 33,982 2.41% 32,349 3.05% TIME DEPOSITS 42,113 4.59% 39,380 4.98% 36,313 4.97% ------- -------- ------- TOTAL INTEREST- 97,264 3.19% 93,444 3.18% 88,857 3.47% BEARING DEPOSITS NONINTEREST- BEARING DEPOSITS 25,103 0.00% 24,598 0.00% 23,408 0.00% -------- ------ -------- ------- -------- ------- TOTAL DEPOSITS $122,367 2.53% $118,042 2.52% $112,265 2.75% ======== ====== ======== ======= ======== =======
A substantial portion of the Bank's deposit base is in time deposits with little dependence on deposits of $100,000 or more, which tend to be less stable. The time deposits are principally nonbusiness certificates of deposit and individual retirement accounts. Deposits of state and local governments and municipal entities are collateralized by investment securities. The Bank does not purchase brokered deposits. The following table is a maturity schedule of time deposits as of December 31, 1999. TABLE 11. TIME DEPOSIT MATURITY SCHEDULE
3 MONTHS 4 TO 6 7 TO 12 OVER 12 (DOLLARS IN THOUSANDS) OR LESS MONTHS MONTHS MONTHS TOTAL - -------------------------------------------------------------------------------------------------------------------- TIME CERTIFICATES OF DEPOSIT $ 7,562 $ 2,155 $ 2,286 $ 1,263 $13,266 OF $100,000 OR MORE TIME CERTIFICATES OF DEPOSIT LESS THAN $100,000 8,249 7,816 5,156 6,249 27,470 ------- ------- ------- ------- ------- TOTAL $15,811 $ 9,971 $ 7,442 $ 7,512 $40,736 ======= ======= ======= ======= =======
17 SHAREHOLDERS' EQUITY AND DIVIDENDS The Bank is subject to a North Carolina State banking capital requirement of at least five percent of total assets. In addition, the Bank is subject to the capital requirements of the Federal Deposit Insurance Corporation ("FDIC"). The FDIC requires the Bank to maintain a (i) Tier 1 capital to risk-weighted assets ratio of 4.00 percent, (ii) a total capital to risk-weighted assets ratio of 8.00 percent and (iii) a leverage ratio of 3.00 percent. At December 31, 1999 and December 31, 1998, the Bank had capital to total assets ratios of 10.33 percent and 10.71 percent, respectively, Tier 1 capital to risk-weighted assets ratio of 15.14 percent and 16.32 percent, respectively, total capital to risk-weighted assets ratios of 16.79 percent and 18.27 percent, respectively and leverage ratios of 10.54 percent and 10.47 percent, respectively. Shareholders' equity, which consists of common stock, surplus and retained earnings provides all of the Company's capital. There are 853,725 shares of common stock outstanding which were held by approximately 1,253 shareholders of record on March 1, 2000, not including persons or entities whose stock is held in nominee or "street" name through various brokerage firms or banks. There is no established market for the Company's common stock, excluding limited sporadic quotations, although the Company's common stock is quoted over-the-counter through the National Daily Quotation System "pink sheets" published by the National Quotation Bureau, Inc. The table below shows the stock prices of the Bank stock for the previous eight quarters. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The stock prices noted below have been adjusted to reflect the three-for-two stock split effective January 21, 2000, which was announced in December 1999.
1999 QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 High $ 18.00 $ 16.50 $ 18.00 $ 17.17 Low $ 15.00 $ 15.58 $ 16.00 $ 16.17 Close $ 15.00 $ 16.50 $ 16.00 $ 17.17
1998 QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 High $ 11.50 $ 11.50 $ 14.33 $ 18.00 Low $ 11.50 $ 11.50 $ 11.50 $ 14.33 Close $ 11.50 $ 11.50 $ 14.33 $ 18.00
The dividends that may be paid by the Bank to its shareholder will be subject to legal limitations. Dividends may not be paid unless the Bank's capital surplus is at least fifty percent of its paid-in capital. The strength of the Bank's capital is sufficient to the extent that there are no restrictions on the payment of dividends under North Carolina State banking rules and regulations. The capital adequacy policy of the Bank limits the amount of the dividend payout ratio to the extent that payment of a dividend causes the Bank's capital to be less than adequate according to regulatory guidelines. Dividends were declared semiannually each year until June 1997. The Board of Directors approved payment of quarterly dividends effective with the first payment in September 1997. The amount shown for June 1997 is based on semiannual declarations of dividends. Cash dividends declared per share for each period are shown in the table below. Dividends declared for the quarters ended September 30, 1999 and December 31, 1999 do not include amounts paid to the holding company and reflect only the amounts paid to the shareholders of M&F Bancorp, Inc. In each instance the amount paid to M&F Bancorp, Inc. was $0.24 and $0.18 respectively, per share. 18 DIVIDENDS DECLARED
1999 1998 1997 March $0.195 $0.195 $ June 0.110 0.195 0.350 September 0.110 0.195 0.195 December 0.110 0.195 0.195
The following table shows return on average assets (net income divided by average assets), return on average equity (net income divided by average shareholders' equity), dividend payout ratio (dividends declared per share divided by net income per share) and shareholders' equity to assets ratio (average shareholders' equity divided by average total assets) for each of the years listed below. TABLE 12. RETURN ON ASSETS AND EQUITY
1999 1998 1997 - ----------------------------------------------------------------------------------------------------------------------- RETURN ON AVERAGE ASSETS 0.71% 0.87% 0.94% RETURN ON AVERAGE EQUITY 6.60% 7.64% 8.07% DIVIDEND PAYOUT 27.92% 36.57% 34.97% SHAREHOLDERS' EQUITY TO AVERAGE ASSETS 10.74% 11.39% 11.60%
The following table sets forth the percentage relationship of significant components of the Company's balance sheet at December 31, 1999 and 1998. 19 TABLE 13. DISTRIBUTION OF ASSETS & LIABILITIES
ASSETS (DOLLARS IN THOUSANDS) 1999 PERCENT 1998 PERCENT - ---------------------------------------------------------------------------------------------------------------- LOANS (NET) $103,560 65.65% $ 94,318 61.26% INVESTMENT SECURITIES 32,477 20.59% 34,162 22.19% FEDERAL FUNDS SOLD 5,100 3.23% 13,550 8.80% -------- -------- -------- -------- TOTAL EARNINGS ASSETS $141,137 89.47% $142,030 92.25% -------- -------- -------- -------- CASH & DUE FROM BANKS $ 9,536 6.05% $ 7,412 4.81% BANK PREMISES & EQUIPMENT 5,013 3.18% 3,030 1.97% OTHER ASSETS 2,058 1.30% 1,493 0.97% -------- -------- -------- -------- TOTAL ASSETS $157,744 100.00% $153,965 100.00% ======== ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY DEMAND DEPOSITS $ 28,583 18.12% $ 28,451 18.48% SAVINGS, NOW & MMDA 60,210 38.17% 55,083 35.78% TIME DEPOSITS $100,000 OR MORE 13,266 8.41% 15,253 9.91% OTHER TIME DEPOSITS 27,470 17.41% 26,507 17.22% -------- -------- -------- -------- TOTAL DEPOSITS $129,529 82.11% $125,294 81.38% -------- -------- -------- -------- BORROWED FUNDS $ 10,000 6.34% $ 10,000 6.49% ACCRUED EXPENSES AND OTHER LIABILITIES 1,916 1.21% 2,174 1.41% -------- -------- -------- -------- TOTAL LIABILITIES $141,445 89.67% $137,468 89.29% -------- -------- -------- -------- SHAREHOLDERS' EQUITY 16,299 10.33% 16,497 10.71% -------- -------- -------- -------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $157,744 100.00% $153,965 100.00% ======== ======== ======== ========
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING The management of the Company is responsible for the preparation of all financial statements, related financial data and other information in this report. The financial statements are prepared in accordance with generally accepted accounting principles and include amounts based on management's estimates and judgment where appropriate. Financial information appearing in this annual report is consistent with the financial statements. The Company's accounting system and related internal accounting controls are designed to provide reasonable assurances that transactions are authorized and recorded in accordance with established procedures, that assets are safeguarded, and that proper and reliable records are maintained. Through these procedures we meet our responsibility for the fairness and integrity of these financial statements. Our internal auditors constantly monitor internal controls and coordinate audit coverage with our independent certified public accountants. The Audit Committee of the Board of Directors meets regularly with management, the internal auditor and the independent certified public accountants to review matters relating to financial reporting, internal accounting control and the nature, extent and results of our audit efforts. Our financial statements have been audited by Deloitte & Touche LLP, independent auditors, who render an independent professional opinion on the Company's financial statements. Their appointment was recommended by the Audit Committee, approved by the Board of Directors, and ratified by the shareholders. Their audit provides an objective assessment of the degree to which the Company's management meets its responsibility for financial reporting. 20 YEAR 2000 The Year 2000 (Y2K) issue arose as a result of computer programs having been written using two digits (rather than four) to define the applicable year, among other problems. Any information technology ("IT") systems with time-sensitive software might recognize a date using "00" as the year 1900 rather than the year 2000, which could result in miscalculations and systems failures. The problem could also extend to many "non-IT" systems; that is, operating and control systems that rely on embedded chip systems. In addition, the Company was at risk from Year 2000 failures on the part of software providers for its core system. Based upon guidance from the Financial Institutions Examination Counsel, the following five phases were identified to ensure Y2K readiness: 1) Awareness, 2) Assessment, 3) Renovation, 4) Validation and 5) Implementation. The Company completed all five phases with respect to its computer systems, including its core processing systems and believes these systems are Y2K compliant. Given the nature of the industry, the Company is only minimally dependent upon non-IT systems such as telephone, security systems and time clocks. With respect to such non-IT systems, the Company completed the implementation phase and believes these systems are Y2K compliant. The Company evaluated other potential Y2K issues. As part of this evaluation, the Company requested and received representations from certain correspondent banks and third-party vendors that indicated their progress toward Y2K compliance. The survey responses did not indicate any Y2K compliance issues that would have resulted in a material adverse effect on the Company's financial position or results of operations. The Company incurred costs for outside consultants and capital expenditures in 1999, 1998 and 1997 related to Y2K, which aggregated approximately $142,000. Future consulting and capital acquisition costs are expected to be minimal. These costs have been funded from operations. The costs incurred through December 31, 1999 did not have a material affect on the Company's financial position or results of operations. Because the Company experienced no major Year 2000-related issues internally or externally over the year 2000 transition, it does not currently believe that it will incur material costs or experience material disruptions in its business associated with the Year 2000. The Company has not experienced any problems, with the Company's ability to build and deliver its products and transact business with its suppliers and customers. The Company has receive no notification from customers regarding Year 2000 issues related to the Company. The Company continues to monitor its systems, suppliers and products for any unanticipated issues that may not yet have manifested. * * * * * * * * * * 21 M&F BANCORP, INC.
BOARD OF DIRECTORS OFFICERS GENERAL COUNSEL William A. Marsh, Jr. Julia W. Taylor Julia W. Taylor SPECIAL COUNSEL Chairman, President and CEO Chairman, President and CEO Gerrish & McCreary, P.C. M&F Bancorp, Inc. M&F Bancorp, Inc. Durham, N.C. Womble, Carlyle, Sandridge & Rice, LLP Lee Johnson, Jr. Benjamin S. Ruffin Vice President President M&F Bancorp, Inc. The Ruffin Group Durham, N.C. Winston-Salem, N.C. Fohliette W. Becote Joseph M. Sansom Secretary/Treasurer Assistant to State Treasurer M&F Bancorp, Inc. Department of State Treasurer Durham, N.C. Raleigh, N.C. Aaron L. Spaulding Founder, President and CEO Galaxy Travel Group, Inc. Durham, N.C.
MECHANICS AND FARMERS BANK BOARD OF DIRECTORS Julia W. Taylor* Chairman, President, and CEO Mechanics and Farmers Bank Durham, N.C. Benjamin S Ruffin* Vice Chairman, Board of Directors Mechanics and Farmers Bank President The Ruffin Group Winston-Salem, N.C. Genevia Gee Fulbright, CPA Vice President Fulbright & Fulbright, CPA, PA Durham, N.C. Lee Johnson, Jr. Executive Vice President, CFO & Financial Group Executive Mechanics and Farmers Bank Durham, N.C. Joseph M. Sansom* Assistant to State Treasurer Department of State Treasurer Raleigh, N.C. John C. Scarborough III Mortician, Scarborough and Hargett Funeral Home Durham, N.C. 22 MECHANICS AND FARMERS BANK Maceo K. Sloan* Chairman, President and CEO Sloan Financial Group, Inc. Durham, N.C. Aaron L. Spaulding* Founder, President and CEO Galaxy Travel Group, Inc. Durham, N.C. Walter S. Tucker, Retired Executive Vice President Mechanics and Farmers Bank Charlotte, N.C. *Executive Committee DIRECTORS EMERITI William J. Kennedy III Lem Long, Jr. John W. Winters CORPORATE OFFICERS Julia W. Taylor Chairman, President and CEO Lee Johnson, Jr. Executive Vice President, Chief Financial Officer and Financial Group Executive Fohliette W. Becote Senior Vice President - Comptroller and Corporate Secretary W. Donald Harrington Senior Vice President - Credit Group Executive Harold G. Sellars Senior Vice President - Banking Group Executive Assistant Corporate Secretary E. Elaine Small Senior Vice President - Operations Group Executive James E. Sansom Senior Vice President and Senior Business Development Officer Evelyn Acree Senior Vice President - City Executive, Winston-Salem Deryle J. Gantt Senior Vice President - City Executive, Durham 23 MECHANICS AND FARMERS BANK Stanley Green, Jr. Senior Vice President - City Executive, Raleigh and Security Officer Jacque Johnson, Jr. Senior Vice President - City Executive, Charlotte Mary Harris Vice President - Loan Operations Manager Lionell Parker Vice President - Branch Operations Support Julia V. Banks Vice President-Manager Assistant Corporate Secretary and Assistant Security Officer, Winston-Salem Helen L. Chavious Vice President-Loan Review Officer and Assistant Corporate Secretary, Durham Brendalyn Alexander Assistant Vice President- Manager and Assistant Corporate Secretary, Raleigh Hargett Street Branch, Raleigh Anne DeLoatch Assistant Vice President- Manager, Parrish Street Branch, Durham BANKING OFFICERS Ethel M. Clay Executive Assistant/Marketing Officer Tanya Dial-Bethune Manager and Assistant Security Officer, Charlotte Lisa C. Burston Manager Chapel Hill Boulevard Branch and Assistant Security Officer Durham William Fisher Manager, Rock Quarry Road Branch and Assistant Security Officer, Raleigh Sheila Winston-Graves Operations Manager-Loan Officer, Rock Quarry Road Branch, Raleigh INTERNAL AUDIT 24 MECHANICS AND FARMERS BANK Anthony Powell Internal Audit Manager and Compliance Officer Jimmie D. Cook Internal Auditor and EDP Security Officer COMMITTEES ASSET-LIABILITY COMMITTEE Aaron L. Spaulding, Chairman Lee Johnson, Jr., Secretary Fohliette W. Becote W. Donald Harrington Harold G. Sellars E. Elaine Small Julia W. Taylor AUDIT & EXAMINING COMMITTEE Benjamin S. Ruffin, Chairman Maceo K. Sloan, Secretary Genevia Gee Fulbright Joseph M. Sansom John C. Scarborough III Walter S. Tucker BUDGET COMMITTEE Lee Johnson Jr., Chairman Fohliette W. Becote, Secretary Ethel M. Clay W. Donald Harrington Harold G. Sellars E. Elaine Small Julia W. Taylor COMPENSATION & MANAGEMENT DEVELOPMENT COMMITTEE Benjamin S. Ruffin, Chairman Joseph M. Sansom, Secretary Genevia Gee Fulbright William J. Kennedy III Lem Long, Jr. YEAR 2000 COMMITTEE Lee Johnson, Jr., Chairman E. Elaine Small, Vice Chairman Lionell Parker, Secretary Fohliette W. Becote Ethel M. Clay W. Donald Harrington Mary Harris William E. Hissong Alice Lyon Anthony Powell Harold G. Sellars Julia W. Taylor Eldred White 25 MECHANICS AND FARMERS BANK PERSONNEL COMMITTEE Genevia Gee Fulbright, Chairman Fohliette W. Becote, Secretary W. Donald Harrington Lee Johnson, Jr. Harold G. Sellars E. Elaine Small Aaron L Spaulding Julia W. Taylor EDP COMMITTEE Joseph M. Sansom, Chairman E. Elaine Small, Secretary Ethel M. Clay W. Donald Harrington William E. Hissong Lee Johnson, Jr. Alice Lyon Lionell Parker Anthony Powell Harold G. Sellars Julia W. Taylor STRATEGIC ISSUES COMMITTEE Aaron L. Spaulding, Chairman Fohliette W. Becote, Secretary W. Donald Harrington Lee Johnson, Jr. Benjamin S. Ruffin Harold G. Sellars E. Elaine Small Julia W. Taylor TRAINING COMMITTEE Anthony Powell, Chairman W. Donald Harrington, Secretary Julia V. Banks Fohliette W. Becote Ethel M. Clay William E. Hissong Alice Lyon Lionell Parker Harold G. Sellars CITY ADVISORY BOARDS DURHAM Genevia Gee Fulbright, Chairman 26 MECHANICS AND FARMERS BANK Deryle J. Gantt, Secretary Sherrod Banks Lori S. Jones-Gibbs Kenneth Ray Hammond Harold G. Sellars Carmelita Spicer Julia W. Taylor Annie S. Vample Charles R. Welch, Jr. CHARLOTTE Lem Long, Jr., Chairman Jacque Johnson, Jr., Secretary George Cook William H. Green Sandra Heartley C. V. Owens Harold G. Sellars Julia W. Taylor Walter S. Tucker RALEIGH Joseph M. Sansom, Chairman Stanley Green, Secretary Elwood Becton Leonard Farrar Helga Greenfield Lori Ann Harris Archie Logan Harold G. Sellars Julia W. Taylor WINSTON-SALEM Benjamin S. Ruffin, Chairman Evelyn Acree, Secretary John P. Card Billy D. Friende, Jr. Sandra Miller Jones Walter Mack Cedric L. Russell Harold G. Sellars Janice Kennedy-Sloan Julia W. Taylor 27 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders M&F Bancorp, Inc. and Subsidiary Durham, North Carolina We have audited the accompanying consolidated statements of condition of M&F Bancorp, Inc. and subsidiary (the "Company") as of December 31, 1999 and 1998, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of M&F Bancorp, Inc. and subsidiary at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche, L.L.P. Raleigh, North Carolina January 21, 2000 28 CONSOLIDATED STATEMENTS OF CONDITION
ASSETS DECEMBER 31, 1999 1998 Cash and amounts due from banks (Note B) $ 9,536,188 $ 7,412,802 Federal funds sold 5,100,000 13,550,000 ------------- ------------- TOTAL CASH AND CASH EQUIVALENTS 14,636,188 20,962,802 ------------- ------------- INVESTMENT SECURITIES (Note C): Securities to be held to maturity at amortized cost (fair value approximates $1,404,389 and $1,454,901 at December 31, 1999 and 1998, respectively) 1,411,883 1,411,481 Securities available for sale at fair market value (amortized cost of $30,469,643 and $30,860,559 at December 31, 1999 and 1998, respectively) 30,390,331 32,250,821 Federal Home Loan Bank Stock, at cost 675,000 500,000 ------------- ------------- TOTAL INVESTMENT SECURITIES 32,477,214 34,162,302 ------------- ------------- LOANS (Notes D and M) 105,243,103 95,804,295 Less: Allowance for possible loan losses (Note E) 1,342,095 1,149,857 Deferred loan fees 341,153 336,869 ------------- ------------- NET LOANS 103,559,855 94,317,569 ------------- ------------- INTEREST RECEIVABLE 900,775 886,680 INCOME TAXES RECEIVABLE (Note I) 122,771 148,915 Premises and equipment, net (Note F) 5,012,836 3,029,959 Foreclosed real estate, net 59,410 45,754 Deferred income taxes, net (Note I) 650,000 90,001 Prepaid expenses and other assets 325,321 321,329 ------------- ------------- TOTAL $ 157,744,370 $ 153,965,311 ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998 LIABILITIES: DEPOSITS (Note G): Demand $ 59,907,708 $ 55,684,371 Passbook savings 28,885,602 27,849,876 Certificates 40,735,843 41,759,576 ------------- ------------- TOTAL DEPOSITS 129,529,153 125,293,823 OTHER BORROWINGS (Note K) 10,000,000 10,000,000 ACCRUED EXPENSES AND OTHER LIABILITIES (Note J) 1,915,867 2,174,632 ------------- ------------- TOTAL LIABILITIES 141,445,020 137,468,455 ------------- ------------- SHAREHOLDERS' EQUITY (Note N and O): Common stock, no par and $5.00 par value at December 31, 1999 and 1998, respectively, authorized 1,000,000 shares; issued and outstanding 569,200 and 569,220 shares at December 31, 1999 and 1998, respectively 5,999,528 2,846,100 Capital surplus 3,153,900 Retained earnings 10,351,974 9,580,293 Accumulated other comprehensive income (loss), net of tax effect of ($27,160) in 1999 and $473,699 in 1998 (52,152) 916,563 ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 16,299,350 16,496,856 ------------- ------------- COMMITMENTS AND CONTINGENCIES (Notes F and H) TOTAL $ 157,744,370 $ 153,965,311 ============= =============
See notes to consolidated financial statements 29 CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1999 1998 1997 INTEREST AND DIVIDEND INCOME - Interest and fees on loans $ 8,728,643 $ 8,530,296 $ 7,760,853 Interest and dividends on investment securities: Taxable 1,352,860 1,408,934 1,542,529 Tax-exempt 518,327 276,852 161,850 Other interest income 258,813 223,709 234,271 ------------ ------------ ------------ TOTAL INTEREST AND DIVIDEND INCOME 10,858,643 10,439,791 9,699,503 INTEREST EXPENSE: Deposits (Note G) 3,104,429 3,217,332 3,086,978 Borrowed funds (Note K) 480,636 136,629 ------------ ------------ ------------ TOTAL INTEREST EXPENSE 3,585,065 3,353,961 3,086,978 NET INTEREST INCOME 7,273,578 7,085,830 6,612,525 PROVISION FOR POSSIBLE LOAN LOSSES (Note E) 244,305 392,035 206,131 ------------ ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 7,029,273 6,693,795 6,406,394 OTHER INCOME: Service charges on deposit accounts 1,226,591 1,185,246 1,213,618 Other service charges, commissions and fees 108,796 107,620 85,637 Net gain (loss) on sales of available-for-sale securities 2,970 (4,463) Other 287,293 268,088 169,099 ------------ ------------ ------------ TOTAL OTHER INCOME 1,625,650 1,560,954 1,463,891 OTHER EXPENSES: Salary and employee benefits (Note J) 3,752,317 3,626,314 3,260,252 Occupancy costs (Note F) 534,557 602,546 569,572 Equipment expense (Note F) 572,455 507,176 530,200 Data processing 429,767 462,829 448,918 Contributions 222,541 27,509 82,989 Telephone 165,209 91,504 80,443 Armored car services 207,621 124,312 65,695 Other 1,346,939 1,143,036 1,095,408 ------------ ------------ ------------ TOTAL OTHER EXPENSES 7,231,406 6,585,226 6,133,477 INCOME BEFORE INCOME TAX EXPENSE 1,423,517 1,669,523 1,736,808 INCOME TAX - EXPENSE (NOTE I) 353,000 455,499 533,000 ------------ ------------ ------------ NET INCOME $ 1,070,517 $ 1,214,024 $ 1,203,808 ------------ ------------ ------------ WEIGHTED AVERAGE SHARES OUTSTANDING 569,213 569,220 569,220 EARNINGS PER SHARE - BASIC AND DILUTED $ 1.88 $ 2.13 $ 2.11 ------------ ------------ ------------ CASH DIVIDENDS DECLARED PER SHARE $ 0.525 $ 0.78 $ 0.74 ============ ============ ============
See notes to consolidated financial statements. 30 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock --------------------------------- Number Capital Comprehensive of Shares Amount Surplus Income BALANCE, JANUARY 1, 1997 569,220 $ 2,846,100 $ 3,153,900 $ Comprehensive income: Net income for year 1,203,808 Other comprehensive income net of tax effect of $151,998: Unrealized gains on securities, net of tax 299,485 Reclassification adjustment (4,463) ---------- Other comprehensive income 295,022 ---------- Total comprehensive income 1,498,830 ========== Cash dividends ------- ----------- ----------- BALANCE, DECEMBER 31, 1997 569,220 2,846,100 3,153,900 Comprehensive income: Net income for year 1,214,024 Other comprehensive income net of tax effect of $105,523: Unrealized gains on securities, net of tax 203,861 ---------- Total comprehensive income 1,417,885 ------- ----------- ----------- ========== Cash dividends BALANCE, DECEMBER 31, 1998 569,220 2,846,100 3,153,900 Repurchase and retirement of common stock (20) (100) (372) Transfer of capital surplus 3,153,528 (3,153,528) Comprehensive income: Net income for year 1,070,517 Other comprehensive loss net of tax effect of $499,655: Unrealized losses on securities, net of tax (970,675) Reclassification adjustment 1,960 --------- Other comprehensive loss (968,715) ---------- Total comprehensive income $ 101,802 ========== Cash dividends --------- ----------- ----------- BALANCE, DECEMBER 31, 1999 569,200 $ 5,999,528 $ ========= =========== =========== Accumulated Total Other Shareholders' Comprehensive Retained Equity Income (Loss) Earnings (Note O) BALANCE, JANUARY 1, 1997 $ 417,680 $ 8,027,685 $ 14,445,365 Comprehensive income: Net income for year 1,203,808 1,203,808 Other comprehensive income net of tax effect of $151,998: Unrealized gains on securities, net of tax Reclassification adjustment Other comprehensive income 295,022 295,022 Total comprehensive income Cash dividends (421,223) (421,223) --------- ---------- ----------- BALANCE, DECEMBER 31, 1997 712,702 8,810,270 15,522,972 Comprehensive income: Net income for year 1,214,024 1,214,024 Other comprehensive income net of tax effect of $105,523: Unrealized gains on securities, net of tax 203,861 203,861 Total comprehensive income Cash dividends (444,001) (444,001) --------- ---------- ----------- BALANCE, DECEMBER 31, 1998 916,563 9,580,293 16,496,856 Repurchase and retirement of common stock (472) Transfer of capital surplus Comprehensive income: Net income for year 1,070,517 1,070,517 Other comprehensive loss net of tax effect of $499,655: Unrealized losses on securities, net of tax Reclassification adjustment Other comprehensive loss (968,715) (968,715) Total comprehensive income Cash dividends (298,836) (298,836) --------- ----------- ----------- BALANCE, DECEMBER 31, 1999 $ (52,152) $10,351,974 $16,299,350 ========= =========== ===========
See notes to consolidated financial statements. 31 CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating Activities: Year Ended December 31, 1999 1998 1997 Net Income $ 1,070,517 $ 1,214,024 $ 1,203,808 Adjustment to reconcile net income to net cash provided by operating activities: Provision for possible loan losses 244,305 392,035 206,131 Provision for depreciation 363,988 380,924 474,624 Amortization on securities 8,078 14,431 16,312 Deferred income tax provision (benefit) (60,000) (6,500) 60,000 Loss (gain) on sale or disposal of assets 141,681 18,677 (14,583) Gain on sale of available-for-sale securities (2,969) 4,463 Loss on sale of foreclosed real estate 10,992 4,056 Donated property 201,774 47,000 Changes in operating assets and liabilities: Deferred loan fees 4,284 (13,093) 39,575 Interest receivable (14,095) (14,672) (29,121) Income taxes receivable 26,144 141,413 (290,328) Prepaid expenses and other assets (3,992) (50) (5,581) Accrued expenses and other liabilities (258,765) 139,338 (47,539) Other (344) (450) 17,481 ------------ ------------ ------------ Net cash provided by operating activities 1,731,598 2,266,077 1,686,298 ------------ ------------ ------------ Investing Activities: Proceeds from sales and maturities of securities available for sale 13,807,244 12,567,733 6,488,893 Purchase of securities available for sale (13,595,635) (15,322,841) (6,879,184) Net increase in loans (9,544,144) (5,491,550) (9,394,868) Purchase of premises and equipment (3,222,487) (748,808) (778,211) Proceeds from sale of assets 532,167 196,212 Proceeds from sale of real estate owned 28,621 22,944 ------------ ------------ ------------ Net cash used in investing activities (11,994,234) (8,995,466) (10,344,214) ------------ ------------ ------------ Financing Activities: Net increase in demand deposit and passbook savings 5,259,063 7,996,976 1,655,207 Net increase (decrease) in certificates of deposit (1,023,733) 3,955,075 3,279,301 FHLB Borrowings 10,000,000 Repurchase of common stock (472) Cash dividends (298,836) (444,001) (421,223) ------------ ------------ ------------ Net cash provided by financing activities 3,936,022 21,508,050 4,513,285 ------------ ------------ ------------ Increase (decrease) in cash and cash equivalents (6,326,614) 14,778,661 (4,144,631) Cash and cash equivalents, beginning of year 20,962,802 6,184,141 10,328,772 ------------ ------------ ------------ Cash and Cash Equivalents, End of Year $ 14,636,188 $ 20,962,802 $ 6,184,141 ============ ============ ============ Supplementary Cash Flow Information - Cash paid for interest $ 3,538,315 $ 3,300,970 $ 2,739,447 Significant Non-cash Transactions: Loans transferred to other real estate owned $ 53,269 $ 32,614 $ Contributions of fixed assets $ 201,774 $ $ 47,000
See notes to consolidated financial statements. 32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SIGNIFICANT ACCOUNTING POLICIES BANK HOLDING COMPANY FORMATION - On September 1, 1999, pursuant to an Agreement of Reorganization and Plan of Exchange among M&F Bancorp, Inc. (the "Company") and Mechanics and Farmers Bank (the "Bank"), the Company acquired all the outstanding stock of the Bank as a result of the reorganization transaction. Under the terms of the agreement, each of the issued and outstanding shares of common stock of the Bank, $5 par value per share, was exchanged for one share of common stock of the Company, no par value per share, in a statutory share exchange and reorganization transaction, owning the same number and percentage of shares in the Company as in the Bank, except for any nominal changes resulting from the elimination of dissenting shareholders. The Bank paid cash dividends of $239,072 to the Company during 1999. BASIS OF PRESENTATION - The consolidated financial statements include the accounts and transactions of the Company and its wholly-owned Bank subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. NATURE OF OPERATIONS - The Bank is a state chartered commercial bank with eight offices in North Carolina: three in Durham, two in Raleigh, two in Charlotte and one in Winston-Salem. The Bank operates in a single business segment and offers a wide variety of banking services and products. CASH AND CASH EQUIVALENTS - Substantially all of the cash and cash equivalents are comprised of highly liquid short-term investments that are carried at cost, which approximates market value. Cash equivalents include demand and time deposits (with original maturities of ninety days or less) at other financial institutions and federal funds sold. Generally, federal funds are purchased and sold for one-day periods. INVESTMENT SECURITIES - The accounting for investment securities is dependent upon their classification as held to maturity, available for sale, or trading securities. Such securities classified as held to maturity are carried at cost, adjusted for the amortization of premiums and accretion of discounts. Securities available for sale and trading securities are carried at market value. Unrealized holding gains and losses for securities available for sale are reported as other comprehensive income. Unrealized holding gains and losses for trading securities are included in earnings of the current period. In order for the securities to qualify as securities held to maturity, the Bank must have both the positive intention and the ability to hold them to maturity. Management utilizes these criteria in determining the accounting treatment accorded such securities. Gains and losses on the sale of available-for-sale securities are determined using the specific-identification method. Declines in the fair value of individual held to maturity and available for sale securities below their cost that are other than temporary are adjusted to their fair value with the related write-downs included in earnings as realized losses. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. LOANS - The Bank grants mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans throughout North Carolina. The ability of the Bank's debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest 33 amounts contractually due are brought current and future payments are reasonably assured. ALLOWANCE FOR POSSIBLE LOAN LOSSES - The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for restructured loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual non-restructured loans for impairment disclosures. FINANCIAL INSTRUMENTS - In the ordinary course of business the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements and commercial letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received. (See Note H.) PREMISES AND EQUIPMENT - Premises and equipment are stated at cost less accumulated depreciation and amortization. For financial reporting purposes, depreciation and amortization are computed by the straight-line and declining-balance methods and are charged to operations over the estimated useful lives of the assets, which range from 15 to 75 years for premises and 3 to 50 years for furniture and equipment. Leasehold improvements are amortized over the terms of the respective leases or the useful lives of the improvements, whichever is shorter. FORECLOSED REAL ESTATE - Real estate acquired through foreclosure is carried at the lower of cost or estimated net realizable value. There is no allowance for loss on foreclosed real estate at December 31, 1999 and 1998. In addition, no amounts were provided for losses on foreclosed real estate during 1999, 1998, or 1997. INCOME TAXES - Deferred income taxes are provided on temporary differences between the financial statement carrying values and the tax bases of assets and liabilities (see Note I). EARNINGS PER SHARE - Earnings per share are calculated on the basis of the weighted-average number of shares outstanding. There were no dilutive potential common shares outstanding for each of the three years in the period ended December 31, 1999. COMPREHENSIVE INCOME - Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income. PRESENTATION - Certain amounts for 1997 and 1998 have been reclassified to conform to the 1999 presentation. 34 ACCOUNTING CHANGE PENDING IMPLEMENTATION - The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of condition and measure those instruments at fair value. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Bank has not fully analyzed the provisions of this statement or its effects on the Company. ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. B. CASH AMOUNTS DUE FROM BANKS The Federal Reserve and banking laws of North Carolina require certain banks to maintain average balances in relation to specific percentages of its customers' deposits as a reserve. At December 31, 1999, such requirement was $1,815,000 which was satisfied by usable vault cash of $4,459,216 and a Federal Reserve balance of $570,812. 35 C. INVESTMENT SECURITIES The amortized cost and estimated fair value of investment securities at December 31 are as follows:
Securities available for sale: 1999 ---------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $10,248,630 $ 4,495 $ (186,357) $10,066,768 Mortgage-backed securities 6,035,036 13,725 (88,254) 5,960,507 Corporate debt securities 4,133,447 (51,703) 4,081,744 Obligations of states and political subdivisions 10,038,888 27,206 (771,681) 9,294,413 Equity securities 13,642 973,257 986,899 ----------- ----------- ----------- ----------- TOTAL $30,469,643 $ 1,018,683 $(1,097,995) $30,390,331 =========== =========== =========== =========== Securities to be held to maturity: 1999 ---------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of states and political subdivisions $ 1,411,883 $ 343 $ (7,838) $ 1,404,388 =========== =========== =========== =========== Securities available for sale: 1998 ---------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $13,750,750 $ 108,810 $ (9,335) $13,850,225 Mortgage-backed securities 4,240,466 30,400 (7,023) 4,263,843 Corporate debt securities 4,106,655 28,082 (23,098) 4,111,639 Obligations of states and political subdivisions 8,749,046 182,415 (111,205) 8,820,256 Equity securities 13,642 1,191,216 1,204,858 ----------- ---------- ----------- ----------- TOTAL $30,860,559 $1,540,923 $ (150,661) $32,250,821 =========== ========== =========== =========== Securities to be held to maturity: 1998 ---------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Obligations of states and political subdivisions $ 1,411,481 $ 43,420 $ $1,454,901 =========== ========== ============ ==========
36 For the years ended December 31, 1999, 1998 and 1997, the Bank had gross realized gains of $2,970, $-0- and $-0-, respectively, and gross realized losses of $-0-, $-0- and $4,463, respectively, on sales of securities available for sale. The scheduled maturities of securities to be held to maturity and securities available for sale at December 31, 1999 are as follows:
Securities to be Securities Available Held to Maturity for Sale ---------------------------- ---------------------------- Amortized Fair Amortized Fair Cost Value Cost Value Due in one year or less $ $ $ 1,725,754 $ 1,718,084 Due from one to five years 1,029,585 1,029,901 9,106,370 8,938,624 Due from five to ten years 382,298 374,487 3,424,931 3,375,526 Due after ten years 16,198,946 15,371,198 No stated maturity 13,642 986,899 ----------- ----------- ----------- ----------- TOTAL $ 1,411,883 $ 1,404,388 $30,469,643 $30,390,331 =========== =========== =========== ===========
For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, are grouped based upon final payment date. The mortgage-backed securities may mature earlier because of principal prepayments. Investment securities having an aggregate par value of $14,745,000 and $12,225,000 at December 31, 1999 and 1998, respectively, were pledged as collateral to secure public funds on deposit and for other purposes as required by law. D. LOANS Loans at December 31 are summarized as follows:
1999 1998 Commercial, financial and agricultural $ 57,654,201 $51,665,615 Real estate construction 4,843,845 747,305 Real estate mortgage 35,086,900 36,492,513 Installment loans to individuals 7,658,157 6,898,862 ------------ ----------- TOTAL $105,243,103 $95,804,295 ============ ===========
At December 31, 1999 and 1998, the Bank had loans totaling approximately $1,818,000 and $1,650,000, respectively, that were contractually delinquent for 90 days or more, in a nonaccrual status or in process of foreclosure. Restructured loans at December 31, 1999 totaled approximately $725,000. There were no restructured loans at December 31, 1998. If income on non-accrual loans had been accrued, such income would have been approximately $63,900 and $50,400 for 1999 and 1998, respectively. These amounts are not included in income. Qualifying first mortgage loans collateralize Federal Home Loan Bank ("FHLB") advances (see Note K). 37 E. ALLOWANCE FOR POSSIBLE LOAN LOSSES Allowance for possible loan losses for the years ended December 31, are summarized as follows:
1999 1998 1997 Balance at beginning of year $ 1,149,857 $ 1,088,785 $ 1,304,451 Provision for possible loan losses 244,305 392,035 206,131 Loans charged off (171,441) (399,020) (439,576) Recoveries 119,374 68,057 17,779 ----------- ----------- ----------- Balance at end of year $ 1,342,095 $ 1,149,857 $ 1,088,785 =========== =========== ===========
There are no loans which are considered to be impaired under SFAS 114. F. PREMISES, EQUIPMENT AND LEASES Major classifications of premises and equipment at December 31 are summarized as follows:
1999 1998 Land $ 102,359 $ 385,543 Premises 5,465,100 2,884,512 Furniture, equipment and leasehold improvements 3,185,566 4,263,041 Construction in progress 180,562 251,160 Total 8,933,587 7,784,256 Less accumulated depreciation 3,920,751 4,754,297 ---------- ---------- Premises and equipment, net $5,012,836 $3,029,959 ========== ==========
The Bank leases premises and equipment under various operating lease agreements that provide for the payment of property taxes, insurance and maintenance costs. Generally, operating leases provide for one or more renewal options on the same basis as current rental terms. However, certain leases require increased rentals under cost of living escalation clauses. Certain of the leases also provide purchase options. Future minimum rental commitments for noncancelable operating leases with initial or remaining terms of one year or more consist of the following:
Year Ending December 31: Amount 2000 $ 306,451 2001 263,828 2002 232,111 2003 58,499 2004 47,274 Thereafter 54,530 ---------- Total minimum payments $ 962,693 ==========
38 Rent expense for all operating leases amounted to approximately $337,000 in 1999, $351,000 in 1998 and $300,000 in 1997. G. DEPOSITS Included in deposits are time certificates of deposit of $100,000 or more of approximately $13,266,000 and $15,253,000 at December 31, 1999 and 1998, respectively. For the years ended December 31, 1999, 1998 and 1997, interest expense on certificates of deposit of $100,000 or more totaled approximately $691,000, $543,000 and $465,000, respectively. At December 31, 1999, the scheduled maturities of certificates are as follows: 2000 $ 33,224,562 2001 5,613,320 2002 915,462 2003 479,279 2004 and thereafter 503,220 ------------ Total Certificates $ 40,735,843 ============
H. COMMITMENTS AND CONTINGENCIES In the normal course of business, the Bank has various commitments to extend credit which are not reflected in the financial statements. At December 31, 1999 and 1998, the Bank had outstanding loan commitments of approximately $23,438,000 and $18,277,000, respectively. Commitments under standby letters of credit amounted to approximately $105,000 and $85,000 at December 31, 1999 and 1998, respectively. These letters of credit represent agreements whereby the Bank guarantees to lend funds to customers up to a predetermined maximum amount. The Bank approves lines of credit to customers through home equity and overdraft protection loans. At December 31, 1999 and 1998, in addition to actual advances made on such loans, the Bank's customers have available additional lines of credit on home equity and consumer overdraft protection loans in the amounts of approximately $1,115,000 and $1,093,000, respectively, and $1,128,000 and $912,500, respectively. I. INCOME TAXES The components of income tax expense for the years ended December 31 are summarized as follows:
1999 1998 1997 Current tax provision $ 413,000 $ 461,999 $473,000 Deferred tax provision (benefit) (60,000) (6,500) 60,000 --------- --------- -------- Income tax expense $ 353,000 $ 455,499 $533,000 ========= ========= ========
39 The approximate tax effect of each type of temporary difference at December 31, is summarized as follows:
1999 1998 1997 Deferred tax assets: Accrued pension expense $ 334,025 $ 329,364 $ 368,394 Bad debt reserve 329,031 263,670 242,906 Deferred loan fees 115,992 114,535 118,987 Unrealized loss on securities available for sale, net 27,160 Interest on non-performing loans 45,218 35,517 Deferred gain on foreclosed real estate 39,968 41,585 46,528 Other 3,272 3,966 1,733 --------- --------- --------- TOTAL 894,666 788,637 778,548 --------- --------- --------- Deferred tax liabilities: Depreciation (244,224) (224,495) (220,361) Unrealized gain on securities available for sale, net (473,699) (367,166) Prepaid expenses and other (442) (442) (1,437) --------- --------- --------- TOTAL (244,666) (698,636) (588,964) --------- --------- ---------
A reconciliation of income taxes computed for the years ended December 31 at the statutory federal income tax rate (34%) to the provision for income tax follows:
1999 1998 1997 Income tax at statutory federal rate $ 485,913 $ 567,638 $ 590,781 Effect of tax exempt interest income (174,559) (99,434) (80,459) Other, net 41,646 (12,705) 22,678 --------- --------- --------- TOTAL $ 353,000 $ 455,499 $ 533,000 ========= ========= =========
The Bank made income tax payments of approximately $386,000, $340,000,and $762,000, in 1999, 1998 and 1997, respectively. J. RETIREMENT AND STOCK COMPENSATION PLANS The Bank sponsors a noncontributory defined benefit pension plan (the "Plan") covering all employees who qualify under length of service and other requirements. Under the Plan, retirement benefits are based on years of service and average earnings. The Plan was amended January 1, 1998. The effect of this amendment was to change to a cash balance plan and change the maximum benefit to $130,000. 40 The Bank's funding policy is to contribute amounts to the Plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, plus such additional amounts as the Bank may determine to be appropriate. The Plan's assets are invested in Flag Investor Mutual Funds by Intercarolina Financial Services. The Bank sponsors a 401(k) plan. Participation in the 401(k) plan is voluntary and employees become eligible after completing twelve months of service and attaining age 21. Employees may elect to contribute up to twelve percent of their compensation to the 401(k) plan. The Bank matches 100 percent of employee contributions up to six percent of each employee's compensation. The 401(k) plan investments are managed by Intercarolina Financial Services. The Bank's contribution to the 401(k) plan was $139,742 and $107,059 for 1999 and 1998, respectively. The following sets forth the plan's funded status and amounts recognized in the statements of condition at December 31, 1999 and 1998.
RETIREMENT PLAN 1999 1998 Change in benefit obligation Benefit obligation at beginning of year $(2,920,386) $(2,891,157) Service cost (34,772) (37,342) Interest cost (184,811) (201,143) Amendments 184,909 Actuarial gain 523,728 24,347 Benefits paid 2,040 ----------- ----------- Benefit obligation at end of year (2,614,201) (2,920,386) ----------- ----------- Change in plan assets Fair value of plan assets at beginning of year 1,772,076 1,854,764 Actual return on plan assets 207,793 152,293 Employer contribution 139,257 250,000 Benefits paid (2,040) (484,981) ----------- ----------- Fair value of plan assets at end of year 2,117,086 1,772,076 ----------- ----------- Funded status (497,115) (1,148,310) Unrecognized net actuarial (gain) loss (23,367) 77,560 Unrecognized prior service cost (259,542) (291,816) Unrecognized transition asset 62,579 578,850 ----------- ----------- Accrued liability $ (717,445) $ (783,716) =========== =========== Weighted-average assumptions as of December 31, Discount rate 7.75 % 7.50 % Expected return on plan assets 8.00 % 8.00 % Rate of compensation increase 6.00 % 6.00 %
41 Net periodic pension cost for the years ended December 31, 1999, 1998 and 1997 includes the following:
1999 1998 1997 Service costs-benefits earned during period $ 34,772 $ 37,342 $ 61,804 Interest cost on projected benefit obligation 184,811 201,143 234,766 Expected return on Plan assets (145,613) (152,293) (171,921) Net amortization and deferral (985) (984) 15,826 --------- --------- --------- Net periodic pension cost $ 72,985 $ 85,208 $ 140,475 ========= ========= =========
The Bank sponsors a nonqualified Supplemental Executive Retirement Plan ("SERP"). The SERP, which is unfunded, provides certain individuals pension benefits, outside the Bank's noncontributory defined-benefit pension plan, based on average earnings, years of service and age at retirement. As a method of funding the benefits, at August 1, 1995 the Bank purchased life insurance in the aggregate amount of $521,976 covering all the participants in the SERP, with the Bank as beneficiary. The Bank intends to keep this life insurance in force indefinitely. EXECUTIVE RETIREMENT PLAN
1999 1998 Change in benefit obligation Benefit obligation at beginning of year $(332,620) $(275,716) Service cost (5,620) (6,519) Interest cost (21,561) (22,800) Actuarial gain (loss) 50,960 (29,117) Benefits paid 1,532 1,532 --------- --------- Benefit obligation at end of year (307,309) (332,620) --------- --------- Change in plan assets Fair value of plan assets at beginning of year Employer contribution 1,532 1,532 Benefits paid (1,532) (1,532) --------- --------- Fair value of plan assets at end of year Funded status (307,309) (332,620) Unrecognized net actuarial gain (77,625) (68,809) Unrecognized prior service cost 84,139 126,210 --------- --------- Accrued liability $(300,795) $(275,219) ========= ========= 1999 1998 Weighted-average assumptions as of December 31, Discount rate 7.75 % 7.50 % Expected return on plan assets 8.00 % 8.00 % Rate of compensation increase 6.00 % 6.00 %
42 Net periodic pension cost for the years ended December 31, 1999, 1998 and 1997 includes the following:
1999 1998 1997 Service costs-benefits earned during period $ 5,620 $ 6,519 $24,929 Interest cost on projected benefit obligation 21,561 22,800 17,595 Net amortization and deferral (73) 22,908 18,664 -------- ------- ------- Net periodic pension cost $ 27,108 $52,227 $61,188 ======== ======= =======
During May 1999, the Company adopted an Incentive Employee Stock Option Plan of 1999 ("Option Plan") for officers of the Bank. The Option Plan is to assist the Company in attracting and retaining key employees and align their interests with those of shareholders. The options have an original term of ten years. The option exercise price is the market price of the common stock on the date the option is granted. During the year ended December 31, 1999 no options were granted under the Option Plan. Participants may exercise options by making full cash payment of the aggregate exercise price for the shares being purchased. At December 31, 1999, options for 57,000 shares of common stock were reserved for future issuance under the Option Plan. K. OTHER BORROWINGS Other borrowings at December 31, 1999 and 1998 were $10,000,000. Pursuant to collateral agreements with the FHLB, advances are secured by all stock in the FHLB and qualifying first mortgage loans. Advances at December 31 are scheduled to mature on October 8, 2008. The interest rate is fixed at 4.64 %. The Bank also periodically borrows funds on an overnight basis via advances from the FHLB and the purchase of Federal funds. There were no overnight borrowings outstanding at December 31, 1999 and 1998. L. RELATED PARTY TRANSACTIONS The Bank has, and expects to have in the future, banking transactions in the ordinary course of business with several of its directors, officers and their associates on the same terms, including interest rate and collateral, as those prevailing at the time for comparable transactions with others. Those transactions do not involve more than the normal risk of collectibility nor do they present any unfavorable features. The aggregate amount of loans to such related parties at December 31, 1999 was approximately $1,090,000. During 1999, new loans to such related parties totaled approximately $370,000 and repayments were approximately $22,000. M. FAIR VALUES OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents - Carrying amount is a reasonable estimate of fair value. Investment Securities - Quoted market price is a reasonable estimate of fair value. 43 Loans - Fair value of variable-rate mortgage loans is estimated using quoted market prices. For nonmortgage variable-rate loans, the carrying amount is considered a reasonable estimate of fair value. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers. Deposits - The fair value of demand and passbook savings accounts is the amount payable on demand at December 31, 1999. The fair value of fixed-maturity certificate accounts is estimated using the present value of the projected cash flows using rates currently offered for similar deposits with similar maturities. Commitments to Extend Credit - The actual committed amount for mortgage loan originations and for unused lines of credit is considered a reasonable estimate of fair value.
December 31, 1999 December 31, 1998 ------------------------ ----------------------- Carrying Fair Carrying Fair (Dollars In Thousands) Amount Value Amount Value Financial Assets: Cash and cash equivalents $ 14,636 $ 14,636 $ 20,963 $ 20,963 Investment securities 32,477 32,470 34,162 34,206 Loans, net 103,560 101,928 94,318 95,400 Financial Liabilities: Deposits 129,529 129,270 125,294 125,632 Long Term Debt 10,000 9,273 10,000 9,682 Unrecognized Financial Instruments: Commitments to extend credit 25,681 20,102 Standby letters of credit 105 85
N. REGULATORY MATTERS The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 1999, that the Bank meets all capital adequacy requirements to which it is subject. 44 As of December 31, 1999, the most recent notification received from the Federal Deposit Insurance Corporation categorized the Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution's category. The Bank's actual capital amounts and ratios are also presented in the table below.
To be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ------------------- ----------------------- ------------------------ (Dollars In Thousands) Amount Ratio Amount Ratio Amount Ratio As of December 31, 1999 Total Capital (to risk weighted assets) $18,021 16.79% $8,585 8.00% $10,731 10.00% Tier 1 Capital (to risk weighted assets) 16,242 15.14% 4,293 4.00% 6,439 6.00% Tier 1 Capital (to average assets) 16,242 10.54% 4,293 4.00% 5,366 5.00% As of December 31, 1998: Total Capital (to risk weighted assets) $17,419 18.27% $7,629 8.00% $ 9,536 10.00% Tier 1 Capital (to risk weighted assets) 15,563 16.32% 3,814 4.00% 5,722 6.00% Tier 1 Capital (to average assets) 15,563 10.47% 3,814 4.00% 4,768 5.00%
O. PARENT COMPANY CONDENSED FINANCIAL INFORMATION Condensed financial information of the Company, at December 31, 1999 and for the period September 1, 1999 to December 31, 1999, is presented below:
Assets Cash $ 5,754 Investment in subsidiary 16,188,919 Other assets 167,291 ----------- Total assets $16,361,964 =========== Liabilities and Shareholders' Equity Accrued expenses and other liabilities $ 62,614 Shareholders' equity 16,299,350 ----------- Total liabilities and shareholders' equity $16,361,964 =========== Condensed Statement of Income Dividends from Bank subsidiary 239,072 ----------- Total income 239,072 Other expenses 3,417 ----------- Income before equity in undistributed net income of subsidiary 235,655 ----------- Equity in undistributed earnings of Bank subsidiary 94,928 ----------- Net income $ 330,583 ===========
45 Statement of Cash Flows Operating activities - Net income $ 330,583 Adjustments to reconcile net cash provided by operations: Undistributed earnings in subsidiary (94,928) Increase in other assets (167,291) Increase in other liabilities 62,614 --------- Net cash provided by operating activities 130,978 --------- Financing activities - Cash dividends (125,224) --------- Increase in cash 5,754 Cash, beginning of period --------- Cash, end of period $ 5,754 =========
* * * * * * * * * * EX-21 4 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT
STATE OF NAME UNDER WHICH SUBSIDIARY INCORPORATION DOES BUSINESS ----------- -------------- ---------------- Mechanics & Farmers Bank North Carolina M&F Bank
EX-23 5 CONSENT OF EXPERTS AND COUNSEL 1 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-95973 of M&F Bancorp, Inc. on Form S-8 of our report dated January 21, 2000, appearing in and incorporated by reference in the Annual Report on Form 10-KSB of M&F Bancorp, Inc. for the year ended December 31, 1999. /s/ DELOITTE & TOUCHE LLP - -------------------------------------- Raleigh, North Carolina March 27, 2000 EX-24 6 POWER OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY The directors of M&F Bancorp, Inc. (the "Company") whose signatures appear below, hereby appoint Julia W. Taylor as their attorney to sign, in their name and behalf and in any and all capacities stated below, the Company's Annual Report on Form 10-KSB pursuant to Section 13 of the Securities Exchange Act of 1934, and likewise to sign any and all amendments and other documents relating thereto as shall be necessary, and such persons hereby granting to each such attorney power to act with or without the other and full power of substitution and revocation and hereby ratifying all of that any such attorney or her substitute may do by virtue hereof. This Power of Attorney has been signed by the following persons in the capacities indicated on the 14th day of March, 2000.
Signature Title - --------- ----- /s/ Julia W. Taylor Director - ------------------------------- Julia W. Taylor /s/ Benjamin S. Ruffin Director - ------------------------------- Benjamin S. Ruffin /s/ Joseph M. Sansom Director - ------------------------------- Joseph M. Sansom /s/ Aaron L. Spaulding Director - ------------------------------- Aaron L. Spaulding /s/ Genevia G. Fulbright Director - ------------------------------- Genevia G. Fulbright /s/ Maceo K. Sloan Director - ------------------------------- Maceo K. Sloan
-1- EX-27 7 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF M&F BANCORP, INC. FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1999 JAN-01-1999 DEC-31-1999 5,349 4,187 5,100 0 31,065 1,412 0 105,243 1,342 157,744 129,529 0 1,916 10,000 0 0 6,000 10,300 157,744 8,729 1,871 259 10,859 3,104 481 7,274 244 0 7,231 1,424 1,424 0 0 1,071 1.88 1.88 5.30 518 1,300 0 0 1,150 171 119 1,342 916 0 426
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