-----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, WO25U6hX9rKDPWVzKRe/yaCUHwVDqamha+u2LNnOw95HtiBmUamWG2PgW1xXkEdJ sN5RUqe7aGztj3JbPKssNg== 0000916641-00-000678.txt : 20000516 0000916641-00-000678.hdr.sgml : 20000516 ACCESSION NUMBER: 0000916641-00-000678 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST NATIONAL CORP /VA/ CENTRAL INDEX KEY: 0000719402 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 541231965 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23976 FILM NUMBER: 630546 BUSINESS ADDRESS: STREET 1: 100 WEST KING STREET CITY: STRASBURG STATE: VA ZIP: 22657 BUSINESS PHONE: 7034659121 MAIL ADDRESS: STREET 1: 100 WEST KING STREET CITY: STRASBURG STATE: VA ZIP: 22657 10-Q 1 FIRST QUARTER REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-23976 FIRST NATIONAL CORPORATION (Exact name of registrant as specified in its charter) Virginia 54-1232965 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 112 West King Street, Strasburg, Virginia 22657 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (540) 465-9121 NONE (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 Months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ Indicate the number of shares of each of the issuer's classes of common stock, as of the latest practicable date: Class: Common stock, $5.00 par value Outstanding as of May 9, 2000: 794,131 FIRST NATIONAL CORPORATION INDEX Part 1. Financial Information Item 1 Financial Statements Page No. Consolidated Statements of Income 3 Consolidated Balance Sheets 4 Consolidated Statements of Cash Flows 5 Consolidated Statements of Changes in Stockholders' Equity 6 Notes to Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Part II. Other Information Item 1 Legal Proceedings 13 Item 4. Submission of Matters to a vote of Security Holders 13 Item 6. Exhibits and Reports on Form 8-K 13 Signature 15 FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Thousands of Dollars) (Except Per Share Amounts)
Three Months Ended March 31, 2000 March 31, 1999 Interest Income Interest and Fees on Loans $3,271 $2,772 Interest on Federal Funds Sold 0 48 Interest on Deposits in Banks 8 6 Interest and Dividends on Investment Securities Available for Sale Taxable 601 633 Non Taxable 82 90 Total Interest Income 3,962 3,549 Interest Expense Interest on Savings Deposits and Interest Bearing Demand Deposits 780 725 Interest on Time Deposits of $100,000 or more 205 156 Interest on All Other Time Deposits 555 657 Interest on Federal Funds Purchased 27 -- Interest on Long-term Debt 489 258 -------- ------- Total Interest Expense 2,056 1,796 -------- ------- Net Interest Income 1,906 1,753 -------- ------- Provision for Loan Losses 123 123 -------- ------- Net Interest Income After Provisions for Loan Losses 1,783 1,630 Other Operating Income Service Charges 177 151 Profits on Securities Available for Sale -- -- Other Operating Income 112 128 -------- -------- Total Operating Income 289 279 Other Operating Expenses Salaries and Employee Benefits 744 633 Occupancy Expense 92 76 Equipment Expense 118 126 Other 462 424 -------- -------- Total Operating Expenses 1,416 1,259 Income Before Income taxes 656 650 Income Taxes 216 201 --------- --------- Net Income $440 $449 ========= ======== Per Share Data Earnings Per Common Share, basic $0.55 $0.57 ========= ======== Earnings Per Common Share, diluted $0.55 $0.57 ========= ======== Cash Dividends 0.290 0.260 ========= =========
The Accompanying Notes Are An Integral Part Of These Statements 3 FIRST NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands of Dollars)
March 31, 2000 December 31, 1999 ASSETS Cash and due from banks $4,300 $4,108 Federal Funds Sold -- -- Investment Securities Available for Sale 44,530 45,129 Held to Maturity -- -- Loans Net of Unearned Discount 154,277 150,760 Less: Allowance for Loan Losses 1,527 1,447 --------- --------- Net Loans 152,750 149,313 Bank Premises and Equipment 4,671 4,700 Interest Receivable 1,163 1,166 Other Real Estate 343 343 Other Assets 2,068 1,859 --------- --------- Total Assets $209,825 $206,618 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Demand Deposits Non-Interest Bearing $18,378 $18,656 Interest Bearing 17,771 17,995 Savings Deposits 56,433 61,943 Certificates of Deposit of $100,000 and over 15,213 12,993 All Other Time Deposits 44,887 41,835 --------- ---------- Total Deposits $152,682 $153,422 Federal Funds Purchased 5,000 1,547 Federal Home Loan Bank Advance 33,598 33,622 Accrued Expenses 1,201 851 --------- --------- Total Liabilities $192,481 $189,442 --------- --------- Stockholders' Equity Common Stock, Par Value $5 per Share; Authorized 2,000,000 Shares, 794,131 and 793,991 Shares Issued and Outstanding $3,971 $3,970 Surplus 1,534 1,531 Accumulated Other Comprehensive Income (1,388) (1,342) Undivided Profits 13,227 13,017 --------- --------- Total Stockholders' Equity $17,344 $17,176 --------- --------- Total Liabilities and Stockholders' Equity $209,825 $206,618 ======== ========
The Accompanying Notes Are An Integral Part of These Statements 4 FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of Dollars)
THREE MONTHS ENDED March 31, 2000 March 31, 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 440 $ 449 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 96 106 Provision for loan losses 123 123 Change in assets and liabilities (Decrease) in interest receivables 3 12 (Increase) in other assets (308) (145) Increase in accrued expenses 403 517 ------- -------- Net Cash Provided by Operating Activities $ 757 $ 1,062 ------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of securities-available for sale $ -- $ -- Proceeds from maturities and principal payments on securities-available for sale 599 2,808 Purchases of securities-available for sale 0 (12,492) Proceeds from maturities and principal payments on securities-held to maturity 0 19 Purchases of bank premises and equipment (67) (72) Net (increase) in loans (3,560) (935) (Increase) in federal funds sold 0 551 ------- -------- Net Cash (Used in) Investing Activities $(3,028) ($10,121) ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in demand deposits, NOW accounts, and savings accounts (6,012) 5,069 Net increase in certificates of deposit 5,272 1,630 Net increase (decrease) in long-term borrowings (24) 981 Net proceeds from issuance of common stock 4 24 Cash dividends paid (230) (205) Net (increase) in federal funds purchased 3,453 -- ------- -------- Net Cash Provided by Financing Activities $2,463 $7,499 ------ -------- Increase (Decrease) in Cash and Cash Equivalents $192 $(1,560) CASH AND CASH EQUIVALENTS: Beginning 4,108 5,026 ---------- -------- Ending $ 4,300 $3,466 ======= ====== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest $ 2,059 $ 1,762 ========= ========= Income Taxes $ 0 $ 0 ========= == ======
The Accompanying Notes Are An Integral Part of These Statements FIRST NATIONAL CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS OF DOLLARS) Three Months Ended March 31, 2000 and 1999
Accumulated Other Common Capital Comprehensive Retained Comprehensive Stock Surplus Income Earnings Income Total Balances, December 31, 1998 $3,945 $1,417 $347 $11,892 $17,601 Comprehensive income: Net income 449 449 449 Other comprehensive income net of tax: Unrealized loss on securities Available for sale (267) (267) Reclassification adjustment 0 0 ----- Other comprehensive income, net of tax (267) (267) ----- Total comprehensive income 182 ===== Issuance of authorized common stock dividend reinvestment plan 4 20 24 Cash dividends declared (205) (205) ------ ------ ---- ------- ------- Balances, March 31, 1999 $3,949 $1,437 $80 $12,136 $17,602 ====== ====== ==== ======= ======= Balances, December 31, 1999 3,970 $1,531 $(1,342) $13,017 $17,176 Comprehensive income: Net Income 440 440 440 Other comprehensive income, net of tax: Unrealized loss on securities available for sale (46) (46) Reclassification adjustment for gains realized in net income 0 0 ----- Total comprehensive income, net of tax (46) (46) ----- Total comprehensive income 394 ===== Issuance of authorized common stock Exercised Options 1 3 4 Cash dividends declared (230) (230) ------ ------ ---- ------- ------- Balances, March 31, 2000 $3,971 $1,534 $(1,388) $13,227 $17,344 ====== ====== ===== ======= =======
The Accompanying Notes Are An Integral Part of These Statements 6 FIRST NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Interim Financial Statements The accompanying consolidated financial statements of First National Corporation and its subsidiaries have not been audited by independent accountants, except for the balance sheet at December 31, 1999. In the opinion of the company's management, the financial statements reflect all adjustments necessary to present fairly the results of operations for the three month periods ended March 31, 2000 and 1999 the company's financial position at March 31, 2000 and December 31, 1999, and the cash flows for the three month periods ended March 31, 2000 and 1999. These adjustments are of a normal recurring nature. Note 2. Securities as of March 31, 2000 and December 31, 1999 are summarized below:
(000 Omitted) March 31, 2000 December 31, 1999 -------------- ----------------- Unrealized Unrealized Cost Market Gain (Loss) Cost Market Gain (Loss) ---- ------ ----------- ---- ------ ----------- Securities Available For Sale U. S. Treasury Securities $0 $0 $0 $0 $0 $0 U. S. Agency Securities 37,807 35,970 ($1,837) 38,337 36,636 ($1701) Obligation of State and Political Subdivisions 6,826 6,520 ($306) 6,826 6,445 ($381) Corporate Securities 1 41 $40 1 49 $48 Other Securities 1,999 1,999 $0 1,999 1,999 $0 -------- -------- ------ --------- ---------- ----------- Total Securities Available for Sale $46,633 $44,530 ($2,103) $47,163 $45,129 ($2,034)
7 FIRST NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3. The consolidated loan portfolio, stated at face amount, is composed of the following:
(000 Omitted) March 31, 2000 December 31, 1999 Real estate loans: Construction and land development $8,118 10,205 Secured by farm land 1,874 1,489 Secured by 1-4 family residential 36,475 58,712 Other real estate loans 42,361 20,971 Loans to farmers (except those secured by real estate) 510 466 Commercial and industrial loans (except those secured by real estate) 32,074 26,441 Loans to individuals for personal expenditures 32,002 31,829 All other loans 876 670 ----------------------------------- Total loans $154,290 150,783 Less unearned income reflected in loans 13 23 ---------------------------------- Loans, net of unearned income $154,277 150,760 ================================== The Bank had loans in a Nonaccrual category of $34,125 on December 31, 1999 and $ 56,923 on March 31, 2000. Note 4. Allowance for Loan Losses Analysis of the Allowance for Loan Losses For the Three Months Ended (000 Omitted) March 31, 2000 March 31, 1999 Balance at Beginning of Period $1,447 $1,226 Charge-Offs 53 196 Recoveries 10 11 -------- ------- Net Charge-Offs 43 185 Provision for Loan Losses 123 123 -------- --------- Balance at End of Period $1,527 $1,164 ======== ======
8 FIRST NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 5. New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued Statement 133, "Accounting for Derivative Instruments and Hedging Activities," which is required to be adopted in years beginning after June 15, 2000. The Statement permits early adoption as of the beginning of any fiscal quarter after its issuance. The Corporation has not determined whether to adopt the new statement early. The Statement will require the Corporation to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. Because the Corporation does not use derivatives, management does not anticipate that the adoption of the new Statement will have any effect on the Corporation's earnings or financial position. 9 FIRST NATIONAL CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview - -------- Net income for the first quarter of 2000 was $440 thousand compared to $449 thousand in the first quarter of 1999. This represents a decrease of 2% and is attributable to an increase in legal and professional fees in the first quarter of 2000 which were incurred for several deposit feasibility studies. Interest and fees on loans, the largest component of interest income, increased $499 thousand during the period, while interest on deposits, the largest component of interest expense, increased $2 thousand resulting in an increase in net interest income of $153 thousand. The provision to the allowance for loan losses remained the same as the previous period at $123 thousand. Other operating expenses increased $157 thousand. Most of the increase in other operating expenses was due to increased salaries and employee benefits in 2000 as compared to 1999. Total other operating income increased $10 thousand during the period. Yields, Rates and Net Interest Margin - ------------------------------------- Interest rates on loans have remained relatively stable during 2000 and in comparison with the first quarter of 1999, the yield on the loan portfolio increased from 8.56% in 1999 to 8.60% in 2000. At the same time the cost of interest bearing deposits increased from 4.45% in the first quarter of 1999 to 4.56% in the same period of 2000. While the yield on earning assets increased 35 basis points from 7.77% in 1999 to 8.12% in 2000, the cost of interest bearing liabilities increased 23 basis points from 4.59% in 1999 to 4.82% in 2000. This resulted in an increase in the bank's interest rate spread from 3.18% in 1999 to 3.30% in 2000. Interest expense as a percentage of average earning assets increased from 3.88% in 1999 to 4.17% in 2000. The bank's net interest margin increased from 3.89% in 1999 to 3.95% in 2000. Future Operations - ----------------- First Bank was one of sixty-five banks seeking to collectively purchase a general insurance agency(s) through membership in the Virginia Bankers Insurance Center. The bank will introduce "internet banking" with a bill-payer feature beginning in mid 2000. Year 2000 Information - --------------------- The Corporation encountered no year 2000 related problems at the end of the year or during the transition on December 31, 1999. Management does not anticipate problems in the coming year regarding this unique and historical event. The bank complied with all of the FFIEC requests, from the assessment of operating systems to the replacement or modification of programs or PCs not compliant with Y2K. These systems were tested and all contingency plans were in place for unexpected occurrences. First Bank spent a total of $212,224 on the Year 2000 project, which included hardware replacements, new software, testing, and contingency planning. Without these expenditures and the diligent efforts of all employees, January 1, 2000 may not have been so peaceful. We are now, more than ever, ready to bring the Bank into the new millennium with new products and more enhanced services. 10 FIRST NATIONAL CORPORATION AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
Three Months Ended March 31, ---------------------------- 2000 1999 Annual Annual Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate(3) Balance Expense Rate(3) ------- ------- ------- ------- ------- ------- ASSETS Balances at correspondent banks - interest bearing $169,342 $8,045 19.00% $245,738 $6,484 10.55% Securities: Taxable 38,124,407 600,716 6.30% 44,257,866 632,550 5.72% Tax-exempt (1) 6,816,963 124,233 7.29% 7,047,827 136,912 7.77% ----------- ------- ----- ----------- ------- ----- Total Securities 44,941,370 724,949 6.45% 51,305,693 769,462 6.00% Loans (net of earned income): (2) Taxable 152,191,182 3,270,090 8.59% 129,402,662 2,769,565 8.56% Tax-exempt (1) 74,392 2,255 12.12% 111,475 3,342 11.99% ----------------------- ------ ------------ ---------- ------ Total Loans 152,265,574 3,272,345 8.60% 129,514,137 2,772,907 8.56% Fed funds sold and repurchase agreements 8,045 110 5.48% 4,025,256 48,438 4.78% ---------- --------- ---- ------------ --------- - Total earning assets 197,384,308 4,005,449 8.12% 185,117,824 3,597,292 7.77% Less: allowance for Loan Losses (1,483,579) (1,254,022) Total nonearning assets 12,067,617 10,349,476 ------------- --------------- Total Assets $207,968,346 $194,213,278 ============ ============ LIABILITIES AND SHAREHOLDER EQUITY Interest bearing deposits: Checking $11,909,996 $33,865 1.14% $10,537,969 $42,582 1.62% Money market savings 5,987,274 44,036 2.94% 6,387,631 48,003 3.01% Regular savings 58,812,915 702,014 4.77% 60,273,968 635,662 4.22% Certificates of deposit: Less than $100,000 43,742,169 555,338 5.08% 49,544,628 656,728 5.30% $100,000 and more 14,738,083 204,859 5.56% 11,458,861 155,583 5.43% ---------- ------- ----- ------------- --------- ----- Total interest bearing deposits 135,190,437 1,540,112 4.56% 138,203,057 1,538,558 4.45% Fed funds purchased 1,781,363 27,198 6.11% --- --- 0.00% Long term borrowings 33,613,862 489,048 5.82% 18,270,301 257,509 5.64% -------- ---- -------------------- --------- - Total interest bearing liabilities 170,585,662 2,056,358 4.82% 156,473,358 1,796,067 4.59% Noninterest bearing liabilities Demand deposits 18,704,406 18,547,760 Other liabilities 1,349,921 1,485,784 ------------- --------------- Total liabilities 190,639,989 176,506,902 Stockholders' equity 17,328,360 17,706,376 ------------- -------------- Total liabilities and stockholders' equity $207,968,349 $194,213,278 ============ ============ Net Interest income 1,949,091 1,801,225 ========= ========= Interest rate spread 3.30% 3.18% Interest expense as a percent of average earning assets 4.17% 3.88% Net interest margin 3.95% 3.89%
(1) Income and yields are reported on a taxable-equivalent basis assuming a federal tax rate of 34% in 1999 and 2000. (2) Loans placed on a nonaccrual status are reflected in the balances. (3) Annualized 11 First National Corporation Item 3. Quantitative and Qualitative Disclosures About Market Risk Not Applicable PART II. OTHER INFORMATION Item 1. Legal Proceedings As of March 31, 2000 neither the Corporation nor the Bank was a party to any legal proceedings. Item 2. Not Applicable Item 3. Not Applicable Item 4. Submission of Matters to a Vote of Security Holders First National Corporation's annual meeting of shareholders was held on Tuesday, April 4, 2000 in Winchester, Virginia. Information relating to the solicitation of proxies required by this item is incorporated by reference from the Corporation's proxy statement dated February 1, 2000 for the Corporation's Annual Meeting of Shareholders held April 4, 2000, filed with the Commission on March 16, 2000. Item 5. Not Applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 2. Plan of acquisition, reorganization, arrangement, liquidation or succession. Not applicable 3. (i) Articles of Incorporation (ii) Bylaws There have been no amendments during the quarter. 4. Instruments defining the rights of security holders, including indentures. Not applicable 10. Material contracts Not applicable 12 First National Corporation PART II. OTHER INFORMATION 11. Statement re computation of per share earnings. Not applicable 15. Letter re unaudited interim financial information. Not applicable 18. Letter re change in accounting principles. Not applicable 19. Report furnished to security holders. Not applicable 22. Published report regarding matters submitted to vote of security holders. Not applicable 23. Consent of experts and counsel. Not applicable 24. Power of attorney Not applicable 27. Financial Data Schedule Filed electronically as a separate document. 99. Additional Exhibits Not applicable (b). Reports on form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. First National Corporation (Registrant) Date May 13, 2000 /s/ Stephen C. Pettit --------------------------- ----------------------------------- Stephen C. Pettit, Comptroller (Principal Accounting Officer and Duly Authorized Officer) 14 EX-27 2 FDS -- FOR 10-Q 3/31/00 FIRST NATIONAL CORPORATION
9 1,000 3-MOS DEC-31-2000 JAN-01-2000 DEC-31-2000 4,106 194 0 0 44,530 0 0 154,277 1,527 209,825 152,682 15,000 1,201 18,598 0 0 3,971 13,373 209,825 3,271 683 8 3,962 1,540 2,056 1,906 123 0 1,416 656 656 0 0 440 0.55 0.55 3.95 57 180 0 981 1,447 53 10 1,527 1,527 0 0
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