-----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, LI31ILNAj0tSN9zM+q52lWk+egoho1UpAj0dgz/wjwHQuOY0dva/wndBs1aqNTj2 fUrRGzAE7uFs5WHAZJdrQg== 0000742170-96-000012.txt : 19960507 0000742170-96-000012.hdr.sgml : 19960507 ACCESSION NUMBER: 0000742170-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960506 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNITY BANCORP INC /MA/ CENTRAL INDEX KEY: 0000742170 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 042841993 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-12756-B FILM NUMBER: 96556489 BUSINESS ADDRESS: STREET 1: 17 POPE ST CITY: HUDSON STATE: MA ZIP: 01749 BUSINESS PHONE: 5085688321 MAIL ADDRESS: STREET 1: 17 POPE STREET CITY: HUDSON STATE: MA ZIP: 01749 10-Q 1 FORM 10-Q FOR 03-31-96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1996 Commission File No. 33-12756-B COMMUNITY BANCORP, INC. A Massachusetts Corporation IRS Employer Identification No. 04-2841993 17 Pope Street, Hudson, Massachusetts 01749 Telephone - (508) 568-8321 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 Common Stock $2.50 par value 3,158,946 shares outstanding as of May 6, 1996 PART I - FINANCIAL INFORMATION COMMUNITY BANCORP, INC. Item 1. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1996 1995 ----------- ----------- ASSETS Cash and due from banks $ 11,642,018 $ 12,668,446 Federal funds sold 7,700,000 16,700,000 Securities available for sale, at market 29,438,019 23,790,470 Securities held to maturity (market value $49,806,956 at 3/31/96 and $50,633,376 at 12/31/95) 50,073,548 50,825,359 Loans 129,546,094 128,072,061 Less allowance for possible loan losses 3,481,044 3,455,098 ----------- ----------- Total net loans 126,065,050 124,616,963 Premises and equipment, net 5,002,270 5,126,083 Other assets, net 3,827,629 3,853,475 ----------- ----------- Total assets $233,748,534 $237,580,796 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits Noninterest bearing $ 44,419,715 $ 45,383,886 Interest bearing 156,737,901 161,655,979 ----------- ----------- Total deposits 201,157,616 207,039,865 Federal funds purchased and securities sold under repurchase agreements 10,636,270 9,289,963 Other liabilities 1,902,463 1,710,295 ----------- ----------- Total liabilities 213,696,349 218,040,123 Commitments Stockholders' equity: Preferred stock, $2.50 par value, 100,000 shares authorized, none issued or outstanding Common stock, $2.50 par value, 4,000,000 shares authorized, 3,199,218 shares issued, 3,158,946 shares outstanding 7,998,045 7,998,045 Surplus 290,253 290,253 Undivided profits 12,031,672 11,463,544 Treasury stock (40,272 shares) (181,224) (181,224) Unrealized losses on securities available for sale, net (86,561) (29,945) ----------- ----------- Total stockholders' equity 20,052,185 19,540,673 ----------- ----------- Total liabilities and stockholders' equity $233,748,534 $237,580,796 =========== =========== See accompanying notes.
-2- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, ------------------------- 1996 1995 --------- ---------- Interest income: Interest and fees on loans $3,101,014 $2,952,232 Interest and dividends on securities: Taxable interest 1,044,609 1,011,866 Nontaxable interest 21,570 23,365 Dividends 12,989 20,352 Interest on federal funds sold 179,516 2,350 --------- --------- Total interest income 4,359,698 4,010,165 --------- --------- Interest expense: Interest on deposits 1,500,433 1,281,406 Interest on short term borrowings 116,958 148,525 --------- --------- Total interest expense 1,617,391 1,429,931 --------- --------- Net interest income 2,742,307 2,580,234 Provision for possible loan losses 0 30,000 --------- --------- Net interest income after provision for possible loan losses 2,742,307 2,550,234 --------- --------- Noninterest income: Merchant credit card assessments 206,366 170,693 Service charges 186,122 177,226 Other charges, commissions and fees 170,587 165,036 Gains (losses) on sales of loans, net 15,503 (12,726) Other 15,295 21,766 --------- --------- Total noninterest income 593,873 521,995 --------- --------- Noninterest expense: Salaries and employee benefits 1,106,656 1,006,997 Data processing 140,299 113,643 Occupancy, net 157,228 147,653 Furniture and equipment 91,389 82,871 Credit card processing 159,202 134,250 Other 440,615 499,072 --------- --------- Total noninterest expense 2,095,389 1,984,486 --------- --------- Income before income taxes 1,240,791 1,087,743 Income taxes 479,967 436,359 --------- --------- Net income $ 760,824 $ 651,384 --------- --------- Earnings per share $ .241 $ .207 Dividends per share $ .061 $ .057 Weighted average number of shares 3,158,946 3,140,754 See accompanying notes.
-3- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, -------------------------- 1996 1995 ----------- ----------- Cash flows from operating activities: Interest received $ 4,352,168 $ 4,228,613 Fees and commissions received 564,786 381,148 Proceeds from secondary market mortgage sales 5,031,532 1,661,593 Origination of mortgage loans for secondary market sales (5,106,130) (1,046,141) Interest paid (1,683,058) (1,562,164) Cash paid to suppliers & employees (2,020,105) (1,465,161) Income taxes paid (81,400) (29,275) ---------- ---------- Net cash provided by operating activities 1,057,793 2,168,613 ---------- ---------- Cash flows from investing activities: Purchases of securities held to maturity (4,224,752) (417,000) Proceeds from maturities of securities held to maturity 5,006,869 383,200 Purchases of securities available for sale (8,153,017) Proceeds from maturities of securities available for sale 2,377,623 1,055,469 Net change in federal funds sold 9,000,000 3,600,000 Net change in loans and other real estate owned (1,297,015) (2,530,000) Acquisition of property, plant and equipment (68,450) (91,573) ---------- ---------- Net cash provided by (used in) investing activities 2,641,258 (2,000,096) ---------- ---------- Cash flows from financing activities: Net change in deposits (5,882,249) (2,547,277) Net change in federal funds purchased (1,000,000) Net change in repurchase agreements 2,346,307 (2,268,933) Dividends paid (189,537) (175,041) ---------- ---------- Net cash used in financing activities (4,725,479) (4,991,251) ---------- ---------- Net decrease in cash and due from banks (1,026,428) (822,542) Cash and due from banks at beginning of period 12,668,446 11,600,385 ---------- ---------- Cash and due from banks at end of period $11,642,018 $10,777,843 ========== ========== See accompanying notes.
-4- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Reconciliation of Net Income to Net Cash Provided by Operating Activities
Three months ended March 31, ------------------------- 1996 1995 ---------- ---------- Net income $ 760,824 $ 651,384 Adjustments to reconcile net income to net cash provided by operating activities: (Increase) decrease in mortgage loans held for sale (159,816) 524,304 Premium on sale of mortgages 85,218 91,148 Depreciation and amortization 210,434 245,553 Provision for loan losses 30,000 (Decrease) increase in other liabilities (135,146) 273,771 Increase in taxes payable 398,567 407,084 (Decrease) in interest payable (65,667) (132,233) (Increase) in other assets (29,088) (140,847) (Increase) decrease in interest receivable (7,533) 218,449 ---------- ---------- Total adjustments 296,969 1,517,229 ---------- ---------- Net cash provided by operating activities $ 1,057,793 $ 2,168,613 ========== ========== See accompanying notes.
-5- COMMUNITY BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 ________________________________________________________________________ 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of results expected for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report to shareholders and Form 10-K for the year ended December 31, 1995. 2. EARNINGS PER SHARE Earnings per share calculations are based on the weighted average number of common shares outstanding during the period. 3. FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENT NO. 122, "ACCOUNTING FOR MORTGAGE SERVICING RIGHTS" Beginning January 1, 1996, the Company adopted Financial Accounting Standards Board Statement No. 122, "Accounting for Mortgage Servicing Rights" (SFAS No. 122), which requires the capitalization of the cost of originating the rights to service mortgage loans for others. In addition, capitalized mortgage servicing rights are required to be assessed for impairment based on the fair value of those rights. The adoption of SFAS No. 122 resulted in the Company recording $12,841 in income associated with the origination of mortgage servicing rights during the quarter ended March 31, 1996. -6- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Summary - ------- The Company recorded net income of $760,824 for the three months ended March 31, 1996, representing an increase of $109,440 or 16.8% over $651,384 for the same period in 1995. Earnings per share increased to $.241 for the current period compared to $.207 for the three months ended March 31, 1995. The improvement in net income for the current three month period resulted from an increase in net interest and noninterest income and a reduction in the provision for loan losses, partially offset by a small increase in noninterest expense. Deposits of $201,157,616 at March 31, 1996 decreased by $5,882,249 or 2.8% from $207,039,865 at December 31, 1995. The decrease occurred primarily in interest bearing categories. Interest bearing deposits decreased by $4,918,078, primarily in the areas of NOW and money market deposit accounts, while noninterest bearing accounts decreased by $964,171, primarily in the area of business demand deposit accounts. Loans of $129,546,094 at March 31, 1996 increased by $1,474,033 or 1.2% from $128,072,061 at December 31, 1995. This increase occurred primarily in the area of commercial loans. Noncurrent loans (nonaccrual loans and loans 90 days or more past due but still accruing) totaled $2,113,757 and $1,650,345 at March 31, 1996 and December 31, 1995, respectively. There were no accruing troubled debt restructurings at March 31, 1996 or December 31, 1995. Other real estate owned of $25,000 at March 31, 1996, was unchanged from December 31, 1995. Assets of $233,748,534 at March 31, 1996 represented a $3,832,262 or 1.6% decrease from $237,580,796 at December 31, 1995. Three Months ended March 31, 1996 as Compared To Three Months ended March 31, 1995 ------------------------------------------------ Net Interest Income - ------------------- Interest income for the three months ended March 31, 1996 was $4,359,698, representing an increase of $349,533 or 8.7% from $4,010,165 for the three months ended March 31, 1995, primarily due to higher loan balances and higher interest rates in 1996. Interest expense was $1,617,391, representing an increase of $187,460 or 13.1% from $1,429,931 for the three months ended March 31, 1995, primarily due to an increase in interest bearing deposits and higher interest rates in 1996. Net interest income for the three months ended March 31, 1996 was $2,742,307, representing an increase of $192,073 or 7.5% over $2,580,234 for the same period in 1995. -7- Noninterest Income and Expense - ------------------------------ Noninterest income for the three months ended March 31, 1996 was $593,873, representing an increase of $71,878 or 13.8% from $521,995 for the same period in 1995. This increase resulted primarily from increases in merchant credit card assessments, service charges, other charges, commissions and fees, and gains on sales of loans. Noninterest expense for the three months ended March 31, 1996 of $2,095,389 represented an increase of $110,903 or 5.6% from $1,984,486 recorded during the same period in 1995. This increase was primarily the result of increases in salaries and employee benefits, data processing, occupancy expense, credit card processing and furniture and equipment expense, partially offset by a decrease in other expense. Provision for Possible Loan Losses - ---------------------------------- The provision for possible loan losses for the three months ended March 31, 1996 was $0, representing a $30,000 or 100.0% reduction from $30,000 for the same period in 1995. This decrease was the result of management's continuing evaluation of the adequacy of the allowance for possible loan losses and its belief that the allowance is adequate. Income Taxes - ------------ Income tax expense of $479,967 for the three months ended March 31, 1996 compared to $436,359 for the same period in 1995, resulting from an increase in taxable income during the current period. Net Income - ---------- Net income of $760,824 for the three months ended March 31, 1996 represented an increase of $109,440 or 16.8% over $651,384 recorded during the same period in 1995. The foregoing discussion summarized the primary components of this increase in earnings. Allowance for Possible Loan Losses - ---------------------------------- The allowance for possible loan losses is maintained at a level believed by management to be adequate to absorb potential losses in the loan portfolio. Management's methodology in determining the adequacy of the allowance considers specific credit reviews, past loan loss experience, current economic conditions and trends and the volume, growth and composition of the loan portfolio. Each loan on the Company's internal Watch List is evaluated periodically for potential losses. For loans with potential losses, the bank sets aside or "allocates" a portion of the ALLL against such potential losses. For the remainder of the portfolio, "unallocated" reserve amounts are determined based on judgements regarding the type of loan, economic conditions and trends, potential exposure to loss and other factors. The allowance for possible loan losses is charged when management determines that the repayment of the principal on a loan is in doubt. Subsequent recoveries, if any, are credited to the allowance. At March 31, -8- 1996, the balance in the allowance was $3,481,044, representing 2.7% of total loans, compared to $3,455,098 or 2.7% of total loans at December 31, 1995. Securities - ---------- The Company's securities portfolio consists of obligations of the U.S. Treasury, government sponsored agencies, mortgage backed securities and obligations of municipalities in the Company's market area. These assets are used in part to secure public deposits and as collateral for repurchase agreements. Total securities were $79,511,567 at March 31, 1996, representing an increase of $4,895,738 or 6.6% from $74,615,829 at December 31, 1995. At March 31, 1996, $29,438,019 in securities were classified as available for sale. There were no sales of securities during the three months ended March 31, 1996. Liquidity and Capital Resources - ------------------------------- The Company's principle sources of liquidity are customer deposits, amortization and pay-offs of loan principal and maturities of investment securities. These sources provide funds for loan originations, the purchase of investment securities and other activities. Deposits are considered a relatively stable source of funds. At March 31, 1996, 1995 and 1994, deposits were $201.2 million, $184.3 million and $175.3 million, respectively. Management anticipates that deposits will increase moderately during 1996. As a nationally chartered member of the Federal Reserve System, the Bank has the ability to borrow funds from the Federal Reserve Bank of Boston by pledging certain of its investment securities as collateral. Also, the Bank is a member of the Federal Home Loan Bank which provides additional borrowing opportunities. Bank regulatory authorities have established a capital measurement tool called "Tier 1" leverage capital. A 3.00% ratio of Tier 1 leverage capital to assets now constitutes the minimum capital standard for banking organizations. At March 31, 1996, the Company's Tier 1 leverage capital ratio was 8.59%. Regulatory authorities have also implemented risk-based capital guidelines requiring a minimum ratio of Tier 1 capital to risk-weighted assets of 4.00% and a minimum ratio of total capital to risk-weighted assets of 8.00%. At March 31, 1996 the Company's Tier 1 and total risk-based capital ratios were 14.70% and 15.97%, respectively. Both the Company and the Bank are categorized as "well capitalized" under the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). The Board of Directors declared a first quarter 1996 dividend of $.061 per share of common stock to shareholders of record at March 1, 1996, payable on April 15, 1996. -9- Asset/Liability Management - -------------------------- The Company has an asset/liability management committee which oversees all asset/liability management activities. The committee establishes general guidelines each year and meets regularly to review the Company's operating results and to make strategic changes when necessary. It is the Company's general policy to reasonably match the rate sensitivity of its assets and liabilities. A common benchmark of this sensitivity is the one year gap position, which is a reflection of the difference between the speed and magnitude of rate changes of interest rate sensitive liabilities as compared with the Bank's ability to adjust the rates of it's interest rate sensitive assets in response to such changes. The Company's positive cumulative one year gap position at March 31, 1996, representing the excess of repricing assets versus repricing liabilities within a one year time frame, was 1.8% expressed as a percentage of total assets. -10- PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (b) The Company did not file a Form 8-K during the quarter ended March 31, 1996. -11- 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. COMMUNITY BANCORP, INC. ----------------------- Date: May 3, 1996 By: /s/ James A. Langway ------------------------- James A. Langway President & Chief Executive Officer Principal Executive Officer Date: May 3, 1996 By: /s/ Donald R. Hughes, Jr. -------------------------- Donald R. Hughes, Jr. Treasurer and Clerk Principal Financial Officer and Principal Accounting Officer -12- EX-27 2 FINANCIAL DATA SCHEDULE FOR 03-31-96
9 This schedule contains summary financial information extracted from the unaudited March 31, 1996 financial statements of Community Bancorp, Inc. and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1996 MAR-31-1996 11642018 0 7700000 0 29438019 50073548 49806956 129546094 3481044 233748534 201157616 10636270 1902463 0 7998045 0 0 12054140 233748534 3101014 1079168 179516 4359698 1500433 1617391 2742307 0 0 2095389 1240791 1240791 0 0 760824 .241 .241 5.08 2133757 7452 0 0 3455098 26644 52590 3481044 1647626 0 1833418
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