-----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, VdBroWLH5WWPq0k/QSEwfNUlN73c39QCRjTJw28llZTXukJzWDdELAmUlMJ3ZmLF XFZfYEla4ev3venhnvlmRA== 0000742170-97-000012.txt : 19970505 0000742170-97-000012.hdr.sgml : 19970505 ACCESSION NUMBER: 0000742170-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970502 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: 97593947 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 03-31-97 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, 1997 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 2,935,012 shares outstanding as of April 30, 1997 PART I - FINANCIAL INFORMATION COMMUNITY BANCORP, INC. Item 1. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1997 1996 ------------ ------------ ASSETS Cash and due from banks $ 15,566,463 $ 14,391,567 Federal funds sold 4,500,000 11,300,000 Securities available for sale, at market 34,763,157 29,245,007 Securities held to maturity (market value $58,979,231 at 3/31/97 and $58,312,349 at 12/31/96) 59,456,344 58,828,881 Loans 131,688,235 131,570,430 Less allowance for possible loan losses 3,472,681 3,481,705 ----------- ----------- Total net loans 128,215,554 128,088,725 Premises and equipment, net 4,896,488 4,848,202 Other assets, net 3,688,920 3,300,076 ----------- ----------- Total assets $251,086,926 $250,002,458 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits Noninterest bearing $ 48,317,521 $ 51,358,151 Interest bearing 167,361,264 165,823,718 ----------- ----------- Total deposits 215,678,785 217,181,869 Securities sold under repurchase agreements 13,072,833 11,454,687 Other liabilities 1,945,099 1,524,768 ----------- ----------- Total liabilities 230,696,717 230,161,324 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, 2,935,012 shares outstanding 7,998,045 7,998,045 Surplus 374,580 374,580 Undivided profits 14,403,193 13,826,958 Treasury stock, 264,206 shares (2,348,419) (2,348,419) Unrealized losses on securities available for sale, net (37,190) (10,030) ----------- ----------- Total stockholders' equity 20,390,209 19,841,134 ----------- ----------- Total liabilities and stockholders' equity $251,086,926 $250,002,458 =========== =========== See accompanying notes.
-2- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME
Three months ended March 31, -------------------------- 1997 1996 ---------- ---------- Interest income: Interest and fees on loans $3,095,446 $3,101,014 Interest and dividends on securities: Taxable interest 1,299,399 1,044,609 Nontaxable interest 62,999 21,570 Dividends 15,077 12,989 Interest on federal funds sold 86,512 179,516 --------- --------- Total interest income 4,559,433 4,359,698 --------- --------- Interest expense: Interest on deposits 1,473,902 1,500,433 Interest on short term borrowings 165,332 116,958 --------- --------- Total interest expense 1,639,234 1,617,391 --------- --------- Net interest income 2,920,199 2,742,307 --------- --------- Provision for possible loan losses 0 0 --------- --------- Net interest income after provision for possible loan losses 2,920,199 2,742,307 --------- --------- Noninterest income: Merchant credit card assessments 248,786 206,366 Service charges 154,029 150,952 Other charges, commissions and fees 192,499 205,757 Gains on sales of loans, net 2,585 15,503 Losses on sales of securities (12,876) 0 Other 33,557 34,719 --------- --------- Total noninterest income 618,580 613,297 --------- --------- Noninterest expense: Salaries and employee benefits 1,189,385 1,106,656 Data processing 143,779 140,299 Occupancy, net 132,748 157,228 Furniture and equipment 100,371 91,389 Credit card processing 200,558 159,202 Other 515,630 460,039 --------- --------- Total noninterest expense 2,282,471 2,114,813 --------- --------- Income before income taxes 1,256,308 1,240,791 Income taxes 480,493 479,967 --------- --------- Net income $ 775,815 $ 760,824 ========= ========= Earnings per share $ .264 $ .241 Dividends per share $ .068 $ .061 Weighted average number of shares 2,935,012 3,158,946 See accompanying notes.
-3- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, --------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities: Interest received $ 4,433,932 $ 4,352,168 Fees and commissions received 489,461 564,786 Proceeds from secondary market mortgage sales 1,812,922 5,031,532 Origination of mortgage loans for secondary market sales (1,678,195) (5,106,130) Interest paid (1,694,698) (1,683,058) Cash paid to suppliers & employees (1,926,262) (2,020,105) Income taxes paid (239,090) (81,400) ---------- ---------- Net cash provided by operating activities 1,198,070 1,057,793 ---------- ---------- Cash flows from investing activities: Purchases of securities held to maturity (2,913,032) (4,224,752) Proceeds from maturities of securities held to maturity 2,204,368 5,006,869 Purchases of securities available for sale (9,079,375) (8,153,017) Proceeds from maturities of securities available for sale 1,590,025 2,377,623 Proceeds from sales of securities available for sale 2,004,596 0 Net change in federal funds sold 6,800,000 9,000,000 Net change in loans (305,683) (1,297,015) Acquisition of property, plant and equipment (245,425) (68,450) ---------- ---------- Net cash provided by investing activities 55,474 2,641,258 ---------- ---------- Cash flows from financing activities: Net change in deposits (1,503,084) (5,882,249) Net change in federal funds purchased 0 (1,000,000) Net change in repurchase agreements 1,618,146 2,346,307 Dividends paid (193,710) (189,537) ---------- ---------- Net cash used in financing activities (78,648) (4,725,479) ---------- ---------- Net increase (decrease) in cash and due from banks 1,174,896 (1,026,428) ---------- ---------- Cash and due from banks at beginning of period 14,391,567 12,668,446 ---------- ---------- Cash and due from banks at end of period $15,566,463 $11,642,018 ---------- ---------- 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, -------------------------- 1997 1996 ----------- ----------- Net income $ 755,815 $ 760,824 Adjustments to reconcile net income to net cash provided by operating activities: Decrease (increase) in mortgage loans held for sale 98,303 (159,816) Premium on sale of mortgages 36,424 85,218 Depreciation and amortization 197,140 210,434 Increase (decrease) in other liabilities 159,073 (135,146) Increase in taxes payable 241,403 398,567 Decrease in interest payable (55,464) (65,667) Increase in other assets (129,122) (29,088) Increase in interest receivable (125,502) (7,533) ---------- ---------- Total adjustments 422,255 269,969 ---------- ---------- Net cash provided by operating activities $ 1,198,070 $ 1,057,793 ========== ========== See accompanying notes.
-5- COMMUNITY BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 ________________________________________________________________________ 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, 1996. 2. EARNINGS PER SHARE (EPS) In February 1997, Financial Accounting Standards Board Statement No. 128, "Earnings Per Share" (SFAS No. 128) was issued. This Statement is effective for both interim and annual periods ending after December 15, 1997, and replaces the presentation of "primary" EPS with a presentation of "basic" EPS. Basic EPS excludes dilution and is computed by dividing income available to holders of common stock by the weighted-average number of common shares outstanding during the period. The Statement also requires the presentation of diluted EPS, if applicable, which is computed similarly to "fully diluted" EPS under existing accounting rules. Restatement of prior years' EPS, if necessary, is also required by this Statement. The adoption of SFAS No. 128 by the Company is not expected to have any impact on the Company's computation of EPS. 3. RECLASSIFICATIONS Certain amounts in the prior period's financial statements have been reclassified to be consistent with the current year's presentation. The reclassifications have no effect on net income. -6- PART I - FINANCIAL INFORMATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Summary - ------- The Company recorded net income of $775,815 for the three months ended March 31, 1997, representing an increase of $14,991 or 2.0% over $760,824 for the same period in 1996. Earnings per share of $.264 for the current period represented an increase of $.023 from $.241 for the Three months ended March 31, 1996. Deposits of $215,678,785 at March 31, 1997 decreased by $1,503,084 or .7% from $217,181,869 at December 31, 1996. This decrease occurred primarily in noninterest bearing deposit categories. Interest bearing deposits increased by $1,537,546, primarily in the area of NOW accounts, savings accounts and certificates of deposit. Noninterest bearing deposits decreased by $3,040,630, primarily in the area of business checking accounts. Loans of $131,688,235 at March 31, 1997 increased by $117,805 or .1% from $131,570,430 at December 31, 1996. This increase occurred primarily in the home equity loan portfolio. Noncurrent loans (nonaccrual loans and loans 90 days or more past due but still accruing) totalled $1,197,581 and $1,266,732 at March 31, 1997 and December 31, 1996, respectively. There were no accruing troubled debt restructurings at March 31, 1997 or December 31, 1996. Assets of $251,086,926 at March 31, 1997 represented a $1,084,468 or .4% increase from $250,002,458 at December 31, 1996. Three months ended March 31, 1997 as Compared To Three months ended March 31, 1996 ------------------------------------------------ Net Interest Income - ------------------- Interest income for the three months ended March 31, 1997 was $4,559,433, representing an increase of $199,735 or 4.6% from $4,359,698 for the three months ended March 31, 1996, primarily due to higher loan and securities balances in 1997. Interest expense was $1,639,234, representing an increase of $21,843 or 1.4% from $1,617,391 for the three months ended March 31, 1996, primarily due to higher average interest bearing deposit balances in 1997. Net interest income for the three months ended March 31, 1997 was $2,920,199, representing an increase of $177,892 or 6.5% from $2,742,307 for the three months ended March 31, 1996. Noninterest Income and Expense - ------------------------------ Noninterest income for the three months ended March 31, 1997 was $618,580, representing an increase of $5,283 or .9% from $613,297 for the three months ended March 31, 1996. This increase was primarily the result of an increase in merchant credit card assessments, partially offset by losses on sales of securities and a reduction in other charges, commissions and fees. -7- Noninterest expense for the three months ended March 31, 1997 of $2,282,471 was up $167,658 or 7.9% from $2,114,813 for the same period in 1996. This increase was primarily the result of increases in salaries and employee benefits, credit card processing and other expense. Provision for Loan Losses - ------------------------- There was no provision for loan losses for the three months ended March 31, 1997 or 1996, reflecting management's continued 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 $480,493 for the three months ended March 31, 1997 compared to $479,967 for the same period in 1996, the result of an increase in taxable income during the current period. Net Income - ---------- Net income of $775,815 for the three months ended March 31, 1997 represented an increase of $14,991 or 2.0% from $760,824 recorded for the three months ended March 31, 1996. Earnings per share of $.264 for the current period represented an increase of $.023 from $.241 for the three months ended March 31, 1996. 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 to estimate 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, 1997, the balance in the allowance was $3,472,681, representing 290% of noncurrent loans, compared to $3,481,705 or 275% of noncurrent loans at December 31, 1996. Securities - ---------- The Company's securities portfolio consists of obligations of the U.S. Treasury, U.S. government sponsored agencies, mortgage backed securities issued by U. S. Government-sponsored agencies and obligations of states and other municipalities. Those securities are used in part to secure public deposits and as collateral for repurchase agreements. -8- Total securities were $94,219,501 at March 31, 1997, representing an increase of $6,145,613 or 7.0% from $88,073,888 at December 31, 1996. At March 31, 1997, $34,763,157 in securities were classified as "available for sale". Sales of securities totalled $2,004,596 during the three months ended March 31, 1997. Liquidity and Capital Resources - ------------------------------- The Company's primary 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, 1997, 1996 and 1995, deposits were $215.7, $202.4 and $185.0 million, respectively. Management anticipates that deposits will remain relatively stable or grow moderately during the remainder of 1997. 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 4.00% ratio of Tier 1 capital to assets now constitutes the minimum capital standard for most banking organizations. At March 31, 1997, the Company's Tier 1 leverage capital ratio was 8.13%. In addition, 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, 1997, the Company's Tier 1 and total risk-based capital ratios were 14.42% and 15.68%, respectively. The Bank is categorized as "well capitalized" under the Federal Deposit Insurance Corporation Improvement Act of 1991 (F.D.I.C.I.A.). Asset/Liability Management - -------------------------- The Company has an asset/liability management committee which oversees all asset/liability activities of the Company. 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 negative cumulative one year gap position at March 31, 1997, representing the excess of repricing liabilities versus repricing assets within a one year time frame, was .8% of total assets. -9- PART II - OTHER INFORMATION --------------------------- Item 5. OTHER INFORMATION On March 18, 1997, the Company's Board of Directors declared a first quarter 1997 cash dividend of $.068 per share of common stock to shareholders of record at March 1, 1997, payable on April 15, 1997. 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, 1997. -10 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 2, 1997 By: /s/ James A. Langway -------------------------- James A. Langway President & Chief Executive Officer Principal Executive Officer Date: May 2, 1997 By: /s/ Donald R. Hughes, Jr. -------------------------- Donald R. Hughes, Jr. Treasurer and Clerk Principal Financial Officer and Principal Accounting Officer -11- EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the unaudited March 31, 1997 consolidated financial statements of Community Bancorp, Inc. and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 MAR-31-1997 15566463 0 4500000 0 34763157 59456344 58979231 131688235 3472681 251086926 215678785 13072833 1945099 0 0 0 7998045 12392164 251086926 3095446 1377475 86512 4559433 1473902 1639234 2920199 0 (12876) 2282471 1256308 1256308 0 0 775815 .264 .264 5.22 970235 227346 0 0 3481705 19356 10332 3472681 1592260 0 1880421
-----END PRIVACY-ENHANCED MESSAGE-----