-----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, Bn6Yld/KPE6VpIkfLyBhgWYTUEQXjRn+IETUQufGLfbw9iVn3QqThtzywShOUUm8 ekZHsVLagmmRxaoJrTh0zA== 0000742170-02-000012.txt : 20020509 0000742170-02-000012.hdr.sgml : 20020509 ACCESSION NUMBER: 0000742170-02-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020509 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: 02639906 BUSINESS ADDRESS: STREET 1: 17 POPE ST CITY: HUDSON STATE: MA ZIP: 01749 BUSINESS PHONE: 978-568-8321 MAIL ADDRESS: STREET 1: 17 POPE STREET CITY: HUDSON STATE: MA ZIP: 01749 10-Q 1 r10q_033102.txt FORM 10-Q FOR MARCH 31, 2002 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, 2002 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 - (978)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 5,940,606 shares outstanding as of March 31, 2002 PART I - FINANCIAL INFORMATION COMMUNITY BANCORP, INC. Item 1. CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, 2002 2001 ---------- ---------- ASSETS Cash and due from banks $ 21,668,519 $ 19,876,999 Federal funds sold 28,706,671 12,912,746 Securities available for sale, at market value 75,772,722 74,116,739 Securities held to maturity (market value $94,773,152 at March 31, 2002 and $99,075,447 at December 31, 2001 93,237,909 97,266,087 Mortgage loans held for sale 1,108,279 1,909,913 Loans 188,158,824 188,452,703 Less allowance for loan losses 2,669,447 2,684,517 ----------- ----------- Total net loans 185,489,377 185,768,186 ----------- ----------- Premises and equipment, net 6,117,096 6,140,477 Other assets, net 4,864,292 4,714,597 ----------- ----------- Total assets $416,964,865 $402,705,744 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits Noninterest bearing $ 78,392,687 $ 78,513,849 Interest bearing 257,457,648 240,552,490 ----------- ----------- Total deposits 335,850,335 319,066,339 ----------- ----------- Securities sold under repurchase agreements 31,972,604 34,023,288 Borrowed funds 10,000,000 10,000,000 Other liabilities 2,281,462 3,305,118 ----------- ----------- Total liabilities 380,104,401 366,394,745 ----------- ----------- Stockholders' equity: Preferred stock, $2.50 par value, 100,000 shares authorized, none issued or outstanding Common stock, $2.50 par value, 12,000,000 shares authorized, 6,398,436 shares issued 15,996,090 15,996,090 Surplus 219,120 219,120 Undivided profits 22,533,233 21,608,513 Treasury stock, at cost, 457,830 shares (2,297,019) (2,297,019) Accumulated other comprehensive income 409,040 784,295 ----------- ----------- Total stockholders' equity 36,860,464 36,310,999 ----------- ----------- Total liabilities and stockholders' equity $416,964,865 $402,705,744 =========== =========== The accompanying notes are an integral part of these unaudited, consolidated financial statements
-2- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended March 31, -------------------------- 2002 2001 ---------- ---------- Interest income: Interest and fees on loans $3,366,694 $3,820,329 Interest and dividends on securities: Taxable interest 1,819,047 1,923,012 Nontaxable interest 313,982 199,565 Dividends 17,236 24,378 Interest on federal funds sold 79,413 452,390 --------- --------- Total interest income 5,596,372 6,419,674 --------- --------- Interest expense: Interest on deposits 1,288,875 2,040,718 Interest on short term borrowings 192,208 433,086 --------- --------- Total interest expense 1,481,083 2,473,804 --------- --------- Net interest income 4,115,289 3,945,870 Provision for loan losses 45,000 -- --------- --------- Net interest income after provision for loan losses 4,070,289 3,945,870 --------- --------- Noninterest income: Merchant credit card assessments 415,783 426,529 Service charges 331,713 325,391 Other charges, commissions and fees 364,806 309,342 Gains on sales of loans, net 64,193 41,870 Gains on sales of securities, net 59,280 -- Other 27,654 26,119 --------- --------- Total noninterest income 1,263,429 1,129,251 --------- --------- Noninterest expense: Salaries and employee benefits 1,712,733 1,645,165 Information technology and ATM network 295,752 294,027 Occupancy, net 259,278 242,042 Furniture and equipment 91,163 101,640 Credit card processing 339,272 387,324 Printing, stationery and supplies 60,519 57,486 Professional fees 118,780 139,721 Marketing and advertising 27,891 55,360 Other 358,394 340,319 --------- --------- Total noninterest expense 3,263,782 3,263,084 --------- --------- Income before income taxes 2,069,936 1,812,037 Income taxes 711,552 638,759 --------- --------- Net income $1,358,384 $1,173,278 ========= ========= -3- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (CONTINUED) (Unaudited) Three months ended March 31, -------------------------- 2002 2001 ---------- ---------- Basic earnings per common share $ .229 $ .198 Diluted earnings per common share $ .228 $ .198 Dividends per share $ .073 $ .058 Basic weighted average number of shares 5,940,606 5,914,441 Diluted weighted average number of shares 5,956,950 5,914,441 The accompanying notes are an integral part of these unaudited, consolidated financial statements.
-4- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Three months ended March 31, ------------------------ 2002 2001 ---------- ---------- Net income $1,358,384 $1,173,278 Other comprehensive income: Unrealized securities (losses) gains arising during period (635,274) 653,596 Income tax benefit (expense) on securities (losses) gains arising during period 260,019 (267,516) ---------- ---------- Net unrealized securities (losses) gains arising during period (375,255) 386,080 ---------- ---------- Less: reclassification adjustment for securities (gains) losses included in income -- -- Income tax expense (benefit) on securities (gains) losses included in income -- -- ---------- ---------- Net reclassification adjustments for securities (gains) losses included in net income -- -- ---------- ---------- Other comprehensive (loss) income (375,255) 386,080 ---------- ---------- Comprehensive income $ 983,129 $1,559,358 ========== ========== The accompanying notes are an integral part of these unaudited, consolidated financial statements.
-5- COMMUNITY BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended March 31, -------------------------- 2002 2001 ----------- ----------- Cash flows from operating activities: Net income $ 1,358,384 $ 1,173,278 Adjustments to reconcile net income to net cash provided by operating activities: Decrease (increase) in mortgage loans held For sale 801,634 (2,100,283) Depreciation and amortization 241,012 239,793 Provision for loan losses 45,000 -- Amortization of investment securities discounts and premiums, net 99,695 38,974 Gain on sale of securities 59,280 -- (Decrease) in other liabilities (1,143,339) (209,821) Increase in taxes payable 505,632 666,244 (Decrease) in interest payable (32,866) (3,409) (Increase) in other assets (3,191) (350,466) (Increase) decrease in interest receivable (146,504) 284,976 ---------- ---------- Total adjustments 426,353 (1,433,992) ---------- ---------- Net cash provided by (used in) operating activities 1,784,737 (260,714) ---------- ---------- Cash flows from investing activities: Maturities, principal repayments and sales of securities available for sale 1,869,374 3,442,232 Maturities and principal repayments of securities held to maturity 4,965,802 23,361,846 Purchases of securities available for sale (4,258,020) -- Purchases of securities held to maturity (999,210) (22,780,457) Net change in federal funds sold (15,793,925) (7,490,700) Net change in loans and other real estate owned 128,863 497,371 Acquisition of property, plant and equipment (217,630) (515,584) ---------- ---------- Net cash used in investing activities (14,304,746) (3,485,292) ---------- ---------- Cash flows from financing activities: Net change in deposits 16,783,996 3,713,791 Net change in repurchase agreements (2,050,684) (2,209,905) Dividends paid (421,783) (331,201) ---------- ---------- Net cash provided by financing activities 14,311,529 1,172,685 ---------- ---------- Net increase(decrease)in cash and due from banks 1,791,520 (2,573,321) ---------- ---------- Cash and due from banks at beginning of period 19,876,999 16,472,547 ---------- ---------- Cash and due from banks at end of period $21,668,519 $13,899,226 ========== ========== The accompanying notes are an integral part of these unaudited, consolidated financial statements. -6- Supplemental disclosures: 1. Cash paid for interest was $1,513,949 and $2,477,213 for the three months ended March 31, 2002 and 2001, respectively. 2. Cash paid for income taxes was $205,920 and $0 for the three months ended March 31, 2002 and 2001, respectively.
-7- COMMUNITY BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2002 _____________________________________________________________________________ 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted 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 unaudited 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, 2001 2. EARNINGS PER SHARE ------------------ The Company adopted Financial Accounting Standards Board Statement No. 128, "Earnings Per Share" (SFAS No. 128), effective December 31, 1997. This Statement requires the presentation of "basic" earnings per share, which excludes the effect of dilution, and "diluted" earnings per share, which includes the effect of dilution. Earnings per share is based on the weighted average number of shares outstanding during the period. A reconciliation between basic and diluted earnings per share from continuing operations is as follows:
Three Months Ended -------------------------------------- March 31, 2002 March 31, 2001 --------------- -------------- Net Earnings $ 1,358,384 $ 1,173,278 Basic EPS: Basic common shares 5,940,606 5,914,441 Basic EPS $ .229 .198 Diluted EPS: Basic common shares 5,940,606 5,914,441 Plus: Impact of stock options 16,344 -- Diluted common shares 5,956,950 5,914,441 Diluted EPS $ .228 $ .198
-8- 3. COMPREHENSIVE INCOME -------------------- The Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income" (SFAS No. 130), effective January 1, 1998. Components of comprehensive income are net income and all other non-owner changes in equity. The Statement requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. 4. OPERATING SEGMENTS ------------------ The Company has adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information", which establishes standards for reporting information about operating segments in financial statements. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision making group, in deciding how to allocate resources and in assessing performance. The adoption of SFAS No. 131 did not have any material effect on the Company's primary financial statements or results of operations. The Company has identified its reportable operating business segment as "Community Banking". The Company's community banking segment consists of commercial and retail banking. The community banking segment is managed as a single strategic unit and derives its revenues from a wide range of banking services, including investing and lending activities and the acceptance of demand, savings and time deposits. Nonreportable operating segments of the Company's operations which do not have similar characteristics to the community banking operations and do not meet the thresholds requiring separate disclosure are included in the "Other" category in the disclosure of business segments below. The nonreportable segment represents the holding company financial information. The accounting policies used in the disclosure of business segments are the same as those described in the summary of significant accounting policies. The consolidation adjustments reflect certain eliminations of intersegment revenue, cash and investments in the subsidiary. Reportable segment-specific information, and the reconciliation to consolidated financial information, are as follows:
Adjustments Community and Banking Other Eliminations Consolidated ----------- ---------- ------------- ------------- March 31, 2002 Investment securities $169,010,631 $ -- $ -- $169,010,631 Net loans 185,489,377 -- -- 185,489,377 Total assets 416,964,865 -- -- 416,964,865 Total interest income 5,596,372 2,596 (2,596) 5,596,372 Total interest expense 1,483,736 -- (2,653) 1,481,083 Net interest income 4,112,636 -- 2,653 4,115,289 Net income $ 1,357,387 $1,358,384 $(1,357,387) $ 1,358,384 _____________________________________________________________________________ -9- Adjustments Community and Banking Other Eliminations Consolidated ----------- ---------- ------------- ------------ March 31, 2001 Investment securities $139,142,717 $ -- $ -- $139,142,717 Net loans 172,745,419 -- -- 172,745,419 Total assets 378,295,993 -- -- 378,295,993 Total interest income 6,419,674 2,812 (2,812) 6,419,674 Total interest expense 2,476,584 -- (2,780) 2,473,804 Net interest income 3,943,090 -- 2,780 3,945,870 Net income $ 1,172,338 $1,173,278 $(1,172,338) $ 1,173,278 _____________________________________________________________________________
5. RECLASSIFICATIONS ----------------- Certain amounts in the prior period's financial statements have been reclassified to be consistent with the current period's presentation. The reclassifications have no effect on net income. -10- 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 $1,358,384 for the three months ended March 31, 2002, representing an increase of $185,106 or 15.8% over $1,173,278 for the same period in 2001. Basic earnings per share of $.229 for the current period represented an increase of $.031 from $.198 for the three months ended March 31, 2001. The improvement in net income resulted primarily from an increase in net interest income, other charges, commissions and fees, and gain on sales of securities, while non-interest expense remained unchanged. Deposits of $335,850,335 at March 31, 2002 increased by $16,783,996 or 5.3% from $319,066,339 at December 31, 2001. The increase in deposits occurred in the interest-bearing categories. Loans of $188,158,824 at March 31, 2002 decreased by $293,879 or 0.2% from $188,452,703 at December 31, 2001. This decrease took place in prime equity, installment, and MasterCard loans, partially offset by an increase in commercial loans. Noncurrent loans (nonaccrual loans, troubled debt restructurings and loans 90 days or more past due but still accruing) totaled $410,634 and $332,981 at March 31, 2002 and December 31, 2001, respectively. Assets of $416,964,865 at March 31, 2002 represented a $14,259,121 or 3.5% increase from $402,705,744 at December 31, 2001. Three months ended March 31, 2002 as Compared To Three months ended March 31, 2001 --------------------------------- Net Interest Income - ------------------- Interest income for the three months ended March 31, 2002 was $5,596,372, representing a decrease of $823,302 or 12.8% from $6,419,674 for the three months ended March 31, 2002, primarily due to lower average interest rates, partially offset by higher average loan and securities balances in 2002. Interest expense was $1,481,083, representing a decrease of $992,721 or 40.1% from $2,473,804 for the three months ended March 31, 2001, primarily due to lower average interest rates, partially offset by higher average interest bearing deposit, repurchase agreement, and borrowing balances in 2002. Net interest income for the three months ended March 31, 2002 was $4,115,289, representing an increase of $169,419 or 4.3% from $3,945,870 for the three months ended March 31, 2001. Noninterest Income and Expense - ------------------------------ Noninterest income for the three months ended March 31, 2002 was $1,263,439 representing an increase of $134,188 or 11.9% from $1,129,251 for the three months ended March 31, 2001. This increase was primarily the result of an increase in other charges, commissions and fees, gains on sales of loans, and gains on sales of securities, partially offset by a decrease in merchant credit card assessments. -11- Noninterest expense for the three months ended March 31, 2002, of $3,263,792 was up $708 or 0.02% from $3,263,084 for the corresponding period in 2001. Increases in salaries and benefits, occupancy and other expenses were offset by decreases in furniture and equipment, credit card processing, professional fees, and marketing and advertising expense. Provision for Loan Losses - ------------------------- The provision for loan losses for the three months ended March 31, 2002 was $45,000, compared to $0 for the three months ended March 31, 2001. This increase reflects management's continuing evaluation of the adequacy of the reserve for loan losses. Income Taxes - ------------ Income tax expense of $711,552 for the three months ended March 31, 2002 compared to $638,759 for the corresponding period in 2001. The increase was the result of an increase in taxable income during the current period. Net Income - ---------- Net income of $1,358,384 for the three months ended March 31, 2002 represented an increase of $185,106 or 15.8% from $1,173,278 recorded for the corresponding period in 2001. Basic earnings per share of $.229 for the current period represented an increase of $.031 from $.198 for the three months ended March 31, 2001. Allowance for Loan Losses - ------------------------- The allowance for loan losses is based on management's estimate of the amount required to reflect the risks in the loan portfolio, based on circumstances and conditions known or anticipated at each reporting date. The methodology for assessing the appropriateness of the allowance consists of a review of the following three key elements: * The valuation allowance for loans specifically identified as impaired * The formula allowance for the various loan portfolio classifications * The imprecision allowance The valuation allowance reflects specific estimates of potential losses on individually impaired loans. When each impaired loan is evaluated, if the net present value of the expected cash flows (or fair value of the collateral if the loan is collateral-dependent) is lower than the recorded loan balance, the difference represents the valuation allowance for that loan. The formula allowance is a percentage-based estimate based on historical loss experience and assigns required allowance allocations by loan classification based on fixed percentages of all outstanding loan balances. The formula allowance employs a risk-rating model that grades loans based on their general characteristics of credit quality and relative risk. When a loan's credit quality becomes suspect, it is placed on the Company's internal "watch list" and its allowance allocation is increased. For the remainder of the loan portfolio, appropriate allowance levels are estimated based on judgments regarding the type of loan, economic conditions and trends, potential exposure to loss and other factors. Losses are charged against the allowance when management believes the collectibility of principal is doubtful. In addition to the valuation allowance and the formula allowance, there is an imprecision allowance that is determined based on the totals of the valuation -12- and formula allowances. The imprecision allowance reflects the measurement imprecision inherent in determining the valuation allowance and the formula allowance. It represents 15% - 25% of the valuation and formula allowances, depending on management's evaluation of various conditions, the effects of which are not directly measured in determining the valuation and formula allowances. The evaluation of the inherent loss resulting from these conditions involves a higher level of uncertainty because they are not identified with specific problem credits or portfolio segments. The conditions evaluated in connection with the imprecision allowance include the following: * Levels of and trends in delinquencies and impaired loans * Levels of and trends in charge-offs and recoveries * Trends in loan volume and terms * Effects of changes in credit concentrations * Effects of and changes in risk selection and underwriting standards, and other changes in lending policies, procedures and practices * National and local economic conditions * Trends and duration of the present business cycle * Findings of internal and external credit review examiners When an evaluation of these conditions signifies a change in the level of risk, the Company adjusts the formula allowance. Periodic credit reviews enable further adjustment to the formula allowance through the risk rating of loans and the identification of loans requiring a valuation allowance. In addition, the formula allowance model is designed to be self-correcting by taking into consideration recent actual loss experience. Securities - ---------- The Company's securities portfolio consists of obligations of the U.S. Government sponsored agencies, mortgage backed securities, obligations of various municipalities, and corporate bonds. Those assets are used in part to secure public deposits and as collateral for repurchase agreements. Total securities were $169,010,631 at March 31, 2002, representing a decrease of $2,372,195 or 1.4% from $171,382,826 at December 31, 2001. Securities classified as available for sale were $75,772,722 and $74,116,739 at March 31, 2002 and December 31, 2001, respectively. There were no sales of securities during the three months ended March 31, 2002, other than the redemption of the Company's shares of stock in the regional ATM network NYCE, when it was purchased by First Data Corporation. Liquidity and Capital Resources - ------------------------------- The Company's primary sources of liquidity are customer deposits, amortization and pay-offs of loan principal and sales 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, 2002 and 2001, deposits were $335,850,335 and $310,842,623, respectively. Management anticipates that deposits will grow moderately during the remainder of 2002. 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. -13- 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, 2002, the Company's Tier 1 leverage capital ratio was 8.74%. 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, 2002 the Company's Tier 1 and total risk-based capital ratios were 15.92% and 17.09%, 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 one-year cumulative gap position at March 31, 2002, representing the excess of repricing liabilities versus repricing assets within a one year time frame, was 4.1% expressed as a percentage of total assets. Cautionary Statement Regarding Forward-Looking Information - ---------------------------------------------------------- This Quarterly Report on Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains, in addition to historical information, "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this and other Reports filed by the Company, the words "anticipate", "estimate", "expect", "objective", and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to a variety of risks and uncertainties. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, risk factors that could cause the Company's actual results to differ materially from those contemplated in any forward-looking statement include, but are not limited to, changes in political and economic conditions, interest rate fluctuations, competitive product and pricing pressures, adverse changes in asset quality, increased inflation, and adverse legislative or regulatory changes. -14- PART II - OTHER INFORMATION --------------------------- Item 5. OTHER INFORMATION On February 19, 2002, the Company's Board of Directors granted stock options under the "2001 Directors' Plan" for the purchase of an aggregate of 18,000 shares of the Company's common stock at a price of $12.00 per share, the fair market value on the date of grant. The granted options fully vest over a four year period. On February 19, 2002, the Company's Board of Directors granted stock options under the "2001 Incentive Stock Option Plan for Key Employees" for the purchase of an aggregate of 90,413 shares of the Company's common stock at a price of $12.00 per share, the fair value on the date of grant. The granted options fully vest over a four year period. There is no established public trading market for the Company's common stock. Therefore, for purposes of the stock options granted on February 19, 2002 pursuant to the 2001 Director's Plan and the 2001 Incentive Stock Option Plan for Key Employees, the fair value of the Company's stock on the date of grant was determined to be equal to the most recent trade price as of that date. On March 19, 2002, the Company's Board of Directors declared a first quarter 2002 cash dividend of $.073 per share of common stock to shareholders of record at March 1, 2002, payable on April 15, 2002. -15- Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The Company did not file a Form 8-K during the quarter ended March 31, 2002. -16- 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 9, 2002 By: /s/ James A. Langway -------------------- James A. Langway President & Chief Executive Officer and Principal Executive Officer Date: May 9, 2002 By: /s/ Donald R. Hughes, Jr. ------------------------- Donald R. Hughes, Jr. Treasurer and Clerk, Principal Financial Officer and Principal Accounting Officer -17- -----END PRIVACY-ENHANCED MESSAGE-----