-----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, B/9Ckm4LAS+/XgANi7ZNmsUUyo1eblZldkWFQl7EUegzGt4mz3n9v9XNXdp7A2kk AVJJxHlDtPF087VXIOIXmA== 0000950129-01-502995.txt : 20010914 0000950129-01-502995.hdr.sgml : 20010914 ACCESSION NUMBER: 0000950129-01-502995 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010913 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20010913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY BANCSHARES INC CENTRAL INDEX KEY: 0000785813 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 521489098 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16234 FILM NUMBER: 1736717 BUSINESS ADDRESS: STREET 1: 1275 PENNSYLVANIA AVE., N.W. CITY: WASHINGTON STATE: DC ZIP: 20004 BUSINESS PHONE: 202-496-40 MAIL ADDRESS: STREET 1: 1275 PENNSYLVANIA AVE NW CITY: WASHINGTON STATE: DC ZIP: 20004 8-K 1 h90650e8-k.txt CENTURY BANCSHARES, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): September 13, 2001 CENTURY BANCSHARES, INC. (Exact Name of Registrant as Specified in Charter) DELAWARE 0-16234 52-1489098 (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.) 1275 PENNSYLVANIA AVENUE, N.W., WASHINGTON, DC 20004 (Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (202) 496-4100 2 ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE. On March 15, 2001, Century Bancshares, Inc. (the "Company" or "Century") completed its previously announced merger (the "Merger") whereby GrandBanc, Inc. ("GrandBanc") was merged into CBI Holdings Corporation, a subsidiary of the Company ("CBI Holdings"), and became a wholly-owned subsidiary of the Company. GrandBanc is the parent holding company of GrandBank, a Maryland chartered commercial bank headquartered in Rockville, Maryland The merger was structured as a reorganization for federal income tax purposes, and will be accounted for as a "pooling of interests." Completion of the Merger was previously reported on Form 8-K dated March 15, 2001, at which time Century filed (a) audited consolidated financial statements for GrandBanc for the three years ended December 31, 1999, (b) unaudited consolidated financial statements for GrandBanc for the three and nine month periods ended September 30, 2000 and 1999, and (c) unaudited pro forma condensed combined financial statements for the nine months ended September 30, 2000 and the three years ended December 31, 199, 1998 and 1997. Filed herewith are the audited consolidated financial statements of GrandBanc for the three years ended December 31, 2000. -2- 3 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of GrandBanc. The following financial statements of GrandBanc are filed herewith. - Independent Auditors' Report - Consolidated Balance Sheets as of December 31, 2000 and 1999 - Consolidated Statements of Operations for Years Ended December 31, 2000, 1999 and 1998 - Consolidated Statements of Changes in Stockholders' Equity for Years Ended December 31, 2000, 1999 and 1998 - Consolidated Statements of Cash Flows for Years Ended December 31, 2000, 1999 and 1998 - Notes to Consolidated Financial Statements for Years Ended December 31, 2000, 1999 and 1998 (c) Exhibits. 23.1 Consent of Stegman & Company, independent auditors for GrandBanc. -3- 4 SIGNATURE 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 hereunto duly authorized. CENTURY BANCSHARES, INC. Dated: September 13, 2001 By: /s/ JOSEPH S. BRACEWELL -------------------------- Joseph S. Bracewell President -4- 5 ITEM 7(a). FINANCIAL STATEMENTS OF GRANDBANC. -5- 6 [Letter of Stegman & Company] INDEPENDENT AUDITORS' REPORT The Stockholders and Board of Directors GrandBanc, Inc. We have audited the accompanying consolidated balance sheets of GrandBanc, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the consolidated financial position of GrandBanc, Inc. and subsidiaries as of December 31, 2000 and 1999, and the consolidated results of their operations and cash flows for each of the three years in the period ended December 31, 2000, are in conformity with accounting principles generally accepted in the United States. /s/ Stegman & Company Baltimore, Maryland February 16, 2001 -6- 7 CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 ASSETS
2000 1999 ------------- ------------- Cash and due from banks $ 3,121,105 $ 4,299,075 Federal funds sold 1,577,773 8,769 Investment securities available for sale - at fair value 43,161,640 44,967,011 Loans 62,439,598 58,992,986 Less allowance for loan losses (965,376) (690,364) ------------- ------------- Loans - net 61,474,222 58,302,622 Bank premises and equipment 3,809,893 3,891,768 Foreclosed real estate -- 114,223 Accrued interest receivable 916,867 868,486 Intangible assets 855,829 1,017,291 Deferred income taxes 2,497,535 3,100,116 Prepaid expenses and other assets 566,911 697,597 ------------- ------------- TOTAL ASSETS $ 117,981,775 $ 117,266,958 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Noninterest-bearing deposits $ 12,913,928 $ 10,637,342 Interest-bearing deposits 91,569,463 90,618,858 ------------- ------------- Total deposits 104,483,391 101,256,200 Short-term borrowings 6,050,491 9,556,919 Long-term debt 177,500 192,500 Accrued expenses and other liabilities 664,835 448,953 ------------- ------------- Total liabilities 111,376,217 111,454,572 ------------- ------------- STOCKHOLDERS' EQUITY: Common stock - $.10 par value; 20,000,000 shares authorized; 4,049,590 shares outstanding in 2000 and 1999 404,959 404,959 Additional paid-in capital 10,962,879 10,962,879 Accumulated deficit (4,275,233) (3,918,210) Accumulated other comprehensive loss (487,047) (1,637,242) ------------- ------------- Total stockholders' equity 6,605,558 5,812,386 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 117,981,775 $ 117,266,958 ============= =============
See accompanying notes. -7- 8 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
2000 1999 1998 ----------- ----------- ---------- INTEREST INCOME: Interest and fees on loans $ 5,851,101 $ 5,613,215 $7,037,460 Interest on taxable investment securities 2,867,463 2,896,016 957,360 Interest on federal funds sold 77,437 103,968 214,203 ----------- ----------- ---------- Total interest income 8,796,001 8,613,199 8,209,023 ----------- ----------- ---------- INTEREST EXPENSE: Interest on certificates of deposit of $100,000 or more 780,995 877,985 811,234 Interest on other deposits 3,520,234 3,312,749 2,902,410 ----------- ----------- ---------- Total interest on deposits 4,301,229 4,190,734 3,713,644 Interest on short-term borrowings 542,186 359,008 257,966 Interest on long-term debt 16,572 17,139 45,865 ----------- ----------- ---------- Total interest expense 4,859,987 4,566,881 4,017,475 ----------- ----------- ---------- NET INTEREST INCOME 3,936,014 4,046,318 4,191,548 PROVISION FOR LOAN LOSSES 435,000 269,330 10,000 ----------- ----------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,501,014 3,776,988 4,181,548 ----------- ----------- ---------- NONINTEREST INCOME: Service charges on deposit accounts 574,591 410,255 320,219 Net realized (loss) gain on sales of securities (32,522) 6,022 5,799 Other income 187,735 193,732 312,093 ----------- ----------- ---------- Total noninterest income 729,804 610,009 638,111 ----------- ----------- ---------- NONINTEREST EXPENSE: Salaries and employee benefits 2,158,927 2,093,337 1,799,906 Occupancy and equipment expense 868,316 918,425 1,021,654 Data processing services 589,618 564,575 469,919 FDIC insurance 20,484 71,045 52,901 Intangible asset amortization 161,462 161,462 159,133 Legal fees 40,364 93,877 108,184 Foreclosed real estate expenses 120,247 423 46,661 Other expenses 749,538 920,140 909,121 ----------- ----------- ---------- Total noninterest expense 4,708,956 4,823,284 4,567,479 ----------- ----------- ---------- (LOSS) INCOME BEFORE INCOME TAXES (478,138) (436,287) 252,180 INCOME TAX (BENEFIT) EXPENSE (121,115) (166,167) 152,938 ----------- ----------- ---------- NET (LOSS) INCOME $ (357,023) $ (270,120) $ 99,242 =========== =========== ========== NET EARNINGS PER COMMON SHARE: Basic $(.09) $(.07) $.02 Diluted $(.09) $(.07) $.02
See accompanying notes. -8- 9 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
Accumulated Additional Other Total Common Paid-in Accumulated Comprehensive Stockholders' Stock Capital (Deficit) (Loss) Income Equity -------- ----------- ----------- ----------- ----------- BALANCE AT JANUARY 1, 1998 $404,091 $10,928,460 $(3,747,332) $ (100,176) $ 7,485,043 Comprehensive income: Net income -- -- 99,242 -- 99,242 Other comprehensive income net of tax: Unrealized gain on investment securities -- -- -- 67,753 67,753 ----------- Total comprehensive income 166,995 Issuance of common stock at $4.06 per share 868 34,419 -- -- 35,287 -------- ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1998 404,959 10,962,879 (3,648,090) (32,423) 7,687,325 Comprehensive income: Net loss -- -- (270,120) -- (270,120) Other comprehensive income net of tax: Unrealized loss on investment securities -- -- -- (1,604,819) (1,604,819) ----------- Total comprehensive loss -- -- -- -- (1,874,939) -------- ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 1999 404,959 10,962,879 (3,918,210) (1,637,242) 5,812,386 Comprehensive income: Net loss -- -- (357,023) -- (357,023) Other comprehensive income net of tax: Unrealized gain on investment securities -- -- -- 1,150,195 1,150,195 ----------- Total comprehensive income -- -- -- -- 793,172 -------- ----------- ----------- ----------- ----------- BALANCE AT DECEMBER 31, 2000 $404,959 $10,962,879 $(4,275,233) $ (487,047) $ 6,605,558 ======== =========== =========== =========== ===========
See accompanying notes. -9- 10 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
2000 1999 1998 ----------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (357,023) $ (270,120) $ 99,242 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 263,130 282,127 254,848 Accretion and amortization of securities 20,633 116,792 59,126 Amortization of intangibles 161,462 161,462 159,133 Provision for loan losses 435,000 269,330 10,000 Net realized gain (loss) from sales of assets 32,522 (6,022) (72,176) Foreclosed real estate - valuation adjustments 114,223 -- -- Deferred income taxes (121,115) (166,167) 133,066 Net changes in: Accrued interest receivable (48,381) (199,534) (66,182) Prepaid expenses and other assets 130,686 194,969 169,382 Accrued expenses and other liabilities 215,882 (47,051) 40,817 Other - net -- 75,994 226,109 ----------- ------------ ------------ Net cash provided by operating activities 847,019 411,780 1,013,365 ----------- ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease in federal funds sold (1,569,004) 5,122,860 (2,294,629) Purchases of available for sale securities (4,700) (22,464,716) (34,965,701) Proceeds from sales, maturities and principal payments of available for sale securities 3,630,807 8,852,242 8,047,947 Proceeds from sales and maturities of held-to maturity securities -- -- 7,216,490 Net decrease (increase) in loans (3,606,600) 1,725,602 15,134,330 Purchase of property and equipment (181,255) (2,349,129) (108,041) Proceeds from sale of foreclosed real estate and other assets -- 260,000 1,126,895 ----------- ------------ ------------ Net cash used by investing activities (1,730,752) (8,853,141) (5,842,709) ----------- ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 3,227,191 4,530,872 8,027,304 Net (decrease) increase in short-term borrowings (3,506,428) 4,992,548 (1,133,666) Repayment of long-term borrowings (15,000) (7,500) (1,300,000) ----------- ------------ ------------ Net cash (used) provided by financing activities (294,237) 9,515,920 5,593,638 ----------- ------------ ------------ NET (DECREASE) INCREASE IN CASH (1,177,970) 1,074,559 764,294 CASH AT BEGINNING OF YEAR 4,299,075 3,224,516 2,460,222 ----------- ------------ ------------ CASH AT END OF YEAR $ 3,121,105 $ 4,299,075 $ 3,224,516 =========== ============ ============
-10- 11 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998 ---------- ----------- ---------- Supplemental disclosures: Interest payments $4,688,349 $ 4,636,875 $4,181,945 Income tax payments -- -- -- Non-cash investing and financing activities: Unrealized gain (loss) on investment securities available for sale $1,150,195 $(1,604,819) $ 67,753 Stock issued in consideration of professional services $ -- $ -- $ 35,287
See accompanying notes. -11- 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of GrandBanc, Inc. (the Corporation), including its wholly owned subsidiaries, GrandBank (the Bank) and Facility Holdings, Inc, conform to accounting principles generally accepted in the United States and to prevailing practices within the banking industry. Certain reclassifications have been made to amounts previously reported to conform with the classifications made in 2000. Consolidation Policy The consolidated financial statements include the accounts of the Corporation, the Bank, and Facility Holdings, Inc., with all significant intercompany transactions eliminated. The financial statements of the Corporation include the Bank under the equity method of accounting. Nature of Operations The Corporation provides commercial banking services from its four locations in Montgomery County, Maryland and one branch in Alexandria, Virginia. Its primary source of revenue is from providing commercial and real estate loans to customers who are predominately small businesses, professionals and middle income individuals located in Montgomery County, suburban Washington, D.C. and northern Virginia. Use of Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investment Securities Available for Sale Investment securities available for sale, are stated at estimated fair value based on quoted market prices. They represent those securities which management may sell as part of its asset/liability strategy or which may be sold in response to changing interest rates, changes in prepayment risk or other similar factors. The cost of securities sold is determined by the specific identification method. Net unrealized gains and losses on these securities are reported as accumulated other comprehensive income, as a separate component of stockholders' equity, net of related income taxes. Loans Loans are stated at their principal amount outstanding net of any deferred fees and costs. Interest income is accrued and credited to income at the contractual rate based on the principal amount outstanding. Loans are placed on non-accrual when specifically determined to be impaired or when principal or interest is delinquent for 90 days or more. Any unpaid interest previously accrued on those loans is reversed from income. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on such loans are applied as a reduction of the loan principal balance. Interest income on other non-accrual loans is recognized only to the extent of interest payments received. -12- 13 Loans are considered impaired when, based on current information, it is probable that the Bank will not collect all principal and interest payments according to the loans' contractual terms. Generally, loans are considered impaired once principal or interest payments become 90 days or more past due and they are placed on non-accrual. Management also considers the financial condition of the borrower, cash flows of the loan and the value of the related collateral. Impaired loans do not include large groups of smaller balance homogeneous loans such as residential real estate and consumer installment loans which are evaluated collectively for impairment. Loans specifically reviewed for impairment are not considered impaired during periods of "minimum delay" in payment (90 days or less) provided eventual collection of all amounts due is expected. The impairment of the loan is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, or the fair value of the collateral if repayment is expected to be provided by the collateral. The majority of the Bank's impaired loans are measured by reference to the fair value of the collateral. Interest income on impaired loans is recognized on the cash basis. Allowance for Loan Losses The allowance for loan losses represents management's current estimate of the amount which adequately provides for possible losses in the portfolio. The adequacy of the allowance is determined by regular review of the loan portfolio considering such factors as current economic conditions and their effect on the creditworthiness of borrowers, changes in the character of the portfolio and historical loan loss experience. The allowance is increased by provisions charged to operating expense and reduced by loans charged-off, net of recoveries of amounts previously charged-off. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Long-Lived Assets Bank premises and equipment are stated at cost and are being depreciated principally on a straight-line basis over the estimated useful lives of the assets. Repair and maintenance costs are charged against income while betterments are capitalized as additions to the related assets. Upon retirement or other disposition of properties, the carrying value and the related accumulated depreciation are removed from the accounts. Intangible assets consisting of goodwill and a premium on purchased deposits are being amortized on the straight-line method over 12 years and 9 years, respectively. Long-lived assets are evaluated regularly for other-than-temporary impairment. If circumstances suggest that their value may be impaired and the write-down would be material, an assessment of recoverability is performed prior to any write-down of the asset. Foreclosed Real Estate Foreclosed real estate represents assets acquired in satisfaction of loans either by foreclosure or deeds taken in lieu of foreclosure. Properties acquired are recorded at the lower of cost or fair value less estimated selling costs at the time of acquisition with any deficiency charged to the allowance for loan losses. Thereafter, costs incurred to operate or carry the properties as well as reductions in value as determined by periodic appraisals or other market studies are charged to operating expense. Gains and losses resulting from the final disposition of the properties are included in noninterest expense. Income Taxes Under the asset and liability method, deferred income taxes reflect the future tax consequences of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end. Deferred tax assets and liabilities are measured using tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are recognized for future deductible temporary differences and tax loss carryforwards if their realization is "more than likely". -13- 14 2. FUTURE APPLICATION OF ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133). In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133, which delayed the effective date of SFAS No. 133 to January 1, 2001 for calendar year companies such as the Corporation. This statement requires derivative instruments be carried at fair value on the balance sheet. The statement continues to allow derivative instruments to be used to hedge various risks and sets forth specific criteria to be used in determining when hedge accounting can be used. The statement also provides for offsetting changes in fair value or cash flows of both the derivative and the hedged asset or liability to be recognized in earnings in the same period; however, any changes in fair value or cash flow that represent the ineffective portion of the hedge are required to be recognized in earnings and cannot be deferred. For derivative instruments not accounted for as hedges, changes in fair value are required to be recognized in earnings. The Corporation adopted the provisions of this statement, as amended, for its quarterly and annual reporting beginning January 1, 2001, the statements effective date. There was no effect on the Corporation's financial position upon adoption of this statement. 3. INVESTMENT SECURITIES The amortized cost and estimated fair value of investment securities at December 31 were as follows:
Gross Gross Estimated Amortized Unrealized Unrealized Fair Available for Sale - 2000 Cost Gains Losses Value ----------- ------- ---------- ----------- Obligations of U.S. government, its agencies and sponsored entities $26,005,813 $ 540 $ 510,880 $25,495,473 Mortgage-backed securities 17,524,521 4,168 345,322 17,183,367 Other investments 424,800 58,000 -- 482,800 ----------- ------- ---------- ----------- Total $43,955,134 $62,708 $ 856,202 $43,161,640 =========== ======= ========== =========== Available for Sale - 1999 Obligations of U.S. government, its agencies and sponsored entities $26,505,063 $ -- $1,665,812 $24,839,251 Mortgage-backed securities 20,709,235 1,463 1,061,038 19,649,660 Other investments 420,100 58,000 -- 478,100 ----------- ------- ---------- ----------- Total $47,634,398 $59,463 $2,726,850 $44,967,011 =========== ======= ========== ===========
-14- 15 The amortized cost and estimated fair value of investment securities at December 31, 2000, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available for Sale ----------------------------- Estimated Amortized Fair Cost Value ----------- ----------- Due in one year or less $ -- $ -- Due after one year through five years 5,599,312 5,548,552 Due after five years through ten years 20,406,501 19,946,921 Due after ten years -- -- ----------- ----------- 26,005,813 25,495,473 Mortgage-backed securities 17,524,521 17,183,367 Other investments 424,800 482,800 ----------- ----------- Total $43,955,134 $43,161,640 =========== ===========
At December 31, securities pledged as collateral for public deposits and for other purposes as required or permitted by law were as follows:
2000 1999 ------------------------- --------------------------- Estimated Estimated Amortized Fair Amortized Fair Cost Value Cost Value ---------- ---------- ----------- ----------- Available-for-sale $8,168,877 $7,978,853 $11,676,829 $11,080,291 ========== ========== =========== ===========
Proceeds from sales together with gross gains and losses realized on sales of securities were as follows:
Available for Sale ---------------------------------------- 2000 1999 1998 ----------- ---------- -------- Proceeds from sale $ 1,581,369 $2,788,977 $477,500 Gross realized (losses) gains (32,522) 6,022 5,799
4. LOANS AND ALLOWANCE FOR LOAN LOSSES The composition of the loan portfolio at December 31 was as follows:
2000 1999 ----------- ----------- Real estate - mortgage $45,690,823 $40,988,523 Real estate - construction -- 93,500 Commercial 11,744,156 13,381,261 Consumer 3,482,603 2,430,209 Credit card receivable 1,522,016 2,099,493 ----------- ----------- Total loans $62,439,598 $58,992,986 =========== ===========
-15- 16 Certain senior officers, directors and companies in which officers and directors are partners and principal stockholders have had loan transactions with the Bank. Such extensions of credit have been made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with outsiders, and at the time did not involve more than the normal risk of collectibility or present other unfavorable circumstances. The following summarizes changes in amounts outstanding, both direct and indirect, to such persons during 2000 and 1999:
2000 1999 ---------- ---------- Balance at January 1 $1,453,564 $2,259,000 Amounts borrowed 742,111 754,564 Amounts paid 936,490 1,560,000 ---------- ---------- Balance at December 31 $1,259,185 $1,453,564 ========== ==========
Activity in the allowance for loan losses for the three years ended December 31 is as follows:
2000 1999 1998 --------- --------- ----------- Balance at January 1 $ 690,364 $ 926,749 $ 1,016,478 Provision for loan losses 435,000 269,330 1,209,000 Loans charged-off (233,150) (581,710) (586,491) Recoveries 73,162 75,995 62,715 --------- --------- ----------- Balance at December 31 $ 965,376 $ 690,364 $ 1,701,702 ========= ========= ===========
At December 31, 2000, 1999 and 1998, the total recorded investment in impaired loans amounted to $379,294, $591,997 and $535,292, respectively. The average balances of these loans were $115,509, $416,948 and $797,148 for the years ended December 2000, 1999 and 1998, respectively. Following is a summary of cash receipts on impaired loans and how they were applied:
2000 1999 1998 -------- -------- ------- Cash receipts applied to principal balance $524,525 $109,178 $87,588 Cash received applied to interest 1,725 -- --
The allowance for loan losses related to impaired loans amounted to approximately $375,000, $59,000 and $2,000 at December 31, 2000, 1999 and 1998, respectively. If interest had been recognized on impaired loans at the original interest rate, interest income would have increased approximately $17,000, $48,000 and $91,000 for the years ended December 31, 2000, 1999 and 1998, respectively. 5. BANK PREMISES AND EQUIPMENT Bank premises and equipment consisted of the following at December 31:
2000 1999 ----------- ----------- Land $ 1,847,288 $ 1,847,288 Building 1,742,056 1,638,068 Leasehold improvements 785,345 765,256 Equipment 952,659 895,777 Furniture and fixtures 196,322 196,322 ----------- ----------- 5,523,670 5,342,711 Less accumulated depreciation (1,713,777) (1,450,943) ----------- ----------- $ 3,809,893 $ 3,891,768 =========== ===========
-16- 17 The Bank leases office space under various lease agreements. Rental expense for 2000, 1999 and 1998 totaled $357,283, $393,046 and $563,128. Future, minimum annual lease payments for operating leases are as follows:
2001 $ 370,867 2002 376,596 2003 342,475 2004 346,787 2005 321,883 Thereafter 1,044,816 ---------- Total $2,803,424 ==========
6. INTANGIBLE ASSETS Following is a summary of intangible assets, net of accumulated amortization, included in the consolidated balance sheets:
Premium on Purchased Goodwill Deposits Total --------- --------- ----------- Balance, January 1, 1999 $ 290,175 $ 888,578 $ 1,178,753 Amortization (30,224) (131,238) (161,462) --------- --------- ----------- Balance, December 31, 1999 259,951 757,340 1,017,291 Amortization (30,224) (131,238) (161,462) --------- --------- ----------- Balance, December 31, 2000 $ 229,727 $ 626,102 $ 855,829 ========= ========= ===========
7. DEPOSITS Deposits at December 31 are summarized as follows:
2000 1999 ------------ ------------ Non-interest-bearing $ 12,913,928 $ 10,637,342 ------------ ------------ Interest-bearing: Savings and interest checking 17,483,624 15,600,802 Money market 14,973,884 12,358,120 Certificates of deposit of $100,000 or more 14,821,681 14,690,520 Other 44,290,274 47,969,416 ------------ ------------ Total interest-bearing 91,569,463 90,618,858 ------------ ------------ Total $104,483,391 $101,256,200 ============ ============
8. SHORT-TERM BORROWINGS At December 31, 2000, the Corporation is indebted to an unaffiliated bank in the amount of $1,700,000. The note bears interest at the prime rate (as defined) plus 1/4% and is adjusted annually. Interest is payable monthly and it requires quarterly principal payments of $25,000 with the remaining balance due June 30, 2001. The common stock of the Corporation's wholly owned subsidiary bank is pledged as collateral for this debt. -17- 18 At December 31, 2000, Facility Holdings, inc. is indebted to an unaffiliated bank in the amount of $780,000. The note bears interest at the prime rate (as defined) plus 1/4%. Interest is payable monthly and the note matures on June 30, 2001. The loan is collateralized by the real property operated as a bank branch in Alexandria, Virginia. Short-term borrowings at December 31, 2000 also consisted of overnight federal funds borrowed, short-term Federal Home Loan Bank advances, securities sold under agreement to repurchase, which are securities sold to the Bank's customers, at the customer's request, under a continuing "roll-over" contract that matures in one business day. The underlying securities sold are U.S. Treasury notes or Federal agencies which are segregated in the Bank's Federal Reserve Bank account from the Company's other investment securities. The following table presents certain information for short-term borrowings:
2000 1999 ---------- ---------- Average amount outstanding during the year $5,761,921 $4,856,188 Weighted average interest rate during the year 5.41% 4.78% Amount outstanding at year end $3,570,491 $7,206,919 Weighted average interest rate at year end 4.91% 4.23% Maximum amount at any month end $8,672,366 $7,432,698
9. LONG-TERM DEBT At December 31, 2000, the Corporation is also indebted to an unaffiliated bank in the amount of $177,500. The note bears interest at the prime rate (as defined) plus 1/4% and is adjusted annually. Interest is payable monthly and the principal is due September 30, 2001. The common stock of the Corporation's wholly owned subsidiary bank is pledged as collateral for this debt. 10. STOCK OPTION PLAN The Corporation maintains a stock option plan for outside directors and an incentive stock option plan for key employees. The plans provide that 100,000 and 200,000 shares of common stock of the Corporation be reserved for each Plan, respectively. The option price shall be the fair market value of the common stock on the date the option is granted, and the option must be exercised within ten years and five years from the date granted for director and incentive stock option plans, respectively. The following is a summary of changes in shares under option for each of the years ended December 31:
2000 1999 1998 -------------------- -------------------- -------------------- Weighted Weighted Weighted Number Average Number Average Number Average of Exercise of Exercise of Exercise Shares Price Shares Price Shares Price -------- ----- -------- ----- -------- ----- Outstanding at beginning of year 189,500 $2.69 160,500 $2.88 121,500 $2.40 Granted 10,000 .88 45,000 2.48 49,000 4.00 Expired (37,500) 3.36 (16,000) 4.00 (10,000) 2.50 ------- ------- ------- Outstanding at end of year 162,000 2.44 189,500 2.69 160,500 2.88 ======= ======= ======= Weighted average fair value of options granted during the year $0.83 $1.36 $2.22 ===== ===== =====
-18- 19 The following summarizes information about options outstanding at December 31, 2000:
Options Outstanding Options Exercisable ------------------------------------------------ ------------------------------ Weighted Average Remaining Weighted Weighted Range of Contractual Average Average Exercise Prices Number Life Exercise Price Number Exercise Price - --------------- -------- --------------- -------------- ------ -------------- $0.88 - $4.00 162,500 5.47 years $2.44 152,500 $2.54
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants during the three years ended December 31:
2000 1999 1998 ------- ------- ------- Dividend yield .00 .00 .00 Expected volatility 30.00% 30.00% 30.00% Risk-free interest rate 6.48% 5.93% 5.86% Expected lives 10 years 10 years 10 years
The Corporation has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123), but applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its Plans. No compensation expense related to the Plans was recorded during the three years ended December 31, 1998. If the Corporation had elected to recognize compensation cost based on the fair value at the grant dates for awards under the Plans consistent with the method of prescribed by SFAS 123, net income and earnings per share would have been changed to the pro forma amounts as follows:
Years Ended December 31, ------------------------------------- 2000 1999 1998 --------- --------- ------- Net (loss) income $(365,323) $(320,520) $13,052 Net (loss) income per share: Basic $ (.09) $ (.08) $ -- Diluted $ (.09) $ (.08) $ --
11. NET EARNINGS PER COMMON SHARE Basic net earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted net earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the year including any potential dilutive common shares outstanding, such as options and warrants. There is no adjustment for stock options in the calculation of diluted earnings per share for 1999 because the effect would have been antidilutable. The calculation of net earnings per common share follows:
Years Ended December 31, -------------------------------------------- 2000 1999 1998 ----------- ----------- ---------- Basic: Net (loss) income (applicable to common stock) $ (357,023) $ (270,120) $ 99,242 Average common shares outstanding 4,049,590 4,049,590 4,048,829 Basic net earnings per share $ (.09) $ (.07) $ .02 Diluted: Net (loss) income (applicable to common stock) $ (357,023) $ (270,120) $ 99,242 Average common shares outstanding 4,049,590 4,049,590 4,048,829 Stock option adjustment -- -- 86,190 Average common shares outstanding - diluted 4,049,590 4,049,590 4,080,063 Diluted net earnings per share $ (.09) $ (.07) $ .00
-19- 20 12. INCOME TAXES Federal and state income tax (benefit) expense consists of the following:
Years Ended December 31, -------------------------------------- 2000 1999 1998 --------- --------- -------- Current federal income tax expense $ -- $ -- $ -- Deferred federal income tax (benefit) expense (90,192) (136,043) 125,217 Deferred state income tax (benefit) expense (30,923) (30,124) 27,721 --------- --------- -------- $(121,115) $(166,167) $152,938 ========= ========= ========
A reconciliation of the differences between the maximum federal statutory income tax rate and the Corporation's effective tax rate for the years ended December 31 is as follows:
2000 1999 1998 --------------------- ----------------------- ------------------- Percent Percent Percent of of of Pretax Pretax Pretax Income Income Income Amount (Loss) Amount (Loss) Amount (Loss) --------- ----- --------- ----- -------- ---- Tax (benefit) at statutory rate $(162,567) (34.0)% $(148,338) (34.0)% $ 85,741 34.0% State income taxes net of federal income tax benefit (20,409) (4.2) (19,882) (4.6) 13,057 5.2 Nondeductible expenses 61,861 12.9 1,553 0.4 10,230 4.0 Net operating loss -- .0 -- .0 43,910 17.4 --------- ----- --------- ----- -------- ---- $(121,115) (25.3)% $(166,167) (38.2)% $152,938 60.6% ========= ===== ========= ===== ======== ====
At December 31 net deferred tax assets consisted of the following:
2000 1999 ---------- ---------- Deferred tax assets: Net operating loss carryforward $1,713,838 $1,764,262 Allowance for loan losses 287,683 181,473 Foreclosed real estate - valuation allowance 46,044 1,932 Depreciation 57,716 29,284 Intangible assets 80,992 62,169 Loan fees and costs 4,814 3,893 Unrealized holding losses on investment securities available for sale 306,448 1,030,145 Other -- 26,958 ---------- ---------- Total deferred tax assets $2,497,535 $3,100,116 ========== ==========
The Company has recorded a deferred tax asset of $2,497,535, which includes the benefit of $4,437,694 in tax loss carryforwards, which expire in varying amounts between 2007 and 2019. Realization depends on generating sufficient taxable -20- 21 income before the expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The amount of loss carryforward available for any one year may be limited if the Company is subject to the alternative minimum tax. 13. REGULATORY MATTERS Capital The Corporation is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The Corporation is required to maintain risk-based and leverage capital as defined by federal banking agencies. The measurement of risk-based capital takes into account the risk of both the balance sheet assets and off-balance sheet exposures. The regulatory guidelines require minimum risk-based capital ratios of 4% for Tier 1 capital and 8% for total capital. In addition a minimum leverage ratio of Tier 1 capital to quarterly average assets of 3% is required for strong banking organizations. A bank is considered "well capitalized", the highest regulatory category, if it has the following minimum ratios: Tier 1 capital of 6%, total risk-based capital of 10%, and Tier 1 leverage ratio of 5%. Quantitative measures established by regulation to ensure capital adequacy require the Corporation and its bank affiliate to maintain at least the minimum amounts of ratios of total Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined). Management believes, as of December 31, 2000, that the Corporation and its bank affiliate met all capital adequacy requirements to which they are subject. As of December 31, 2000, the most recent notification from the primary regulators for the Corporation's affiliate banking institution categorized the bank as well capitalized under the prompt corrective action regulations. To be categorized as well capitalized a bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the tables below. There are no conditions or events since the last notifications that management believes have changed the affiliate bank's category. The capital ratios of GrandBank, the Corporation's banking subsidiary, were as follows:
December 31 -------------------------------- 2000 1999 ------------ ------------ Capital: Tier 1 capital $ 7,476,920 $ 7,558,793 Tier 2 capital 971,382 690,364 ------------ ------------ Total capital $8,448,302 $8,249,157 ============ ============ Assets: Risk-weighted assets $ 75,592,000 $ 74,927,000 Average assets (fourth quarter) 115,591,270 118,135,470
Well Capitalized Regulatory Actual Rates Minimums --------------------- ----------- 2000 1999 ------ ------ Ratios: Tier 1 capital to risk-weighted assets 9.7% 10.1% 6.0% Total capital to risk-weighted assets 10.9% 11.0% 10.0% Tier 1 leverage to average assets 6.6% 6.4% 5.0%
-21- 22 Dividends Dividends payable by the Corporation are unrestricted, although the ability of the Corporation to pay dividends depends upon dividends received by it from the Bank. The Board of Directors adopted a resolution specifying that no dividends will be paid by the Bank to the Corporation, except from the undivided profits of the Bank, or with the prior approval of the Bank Commissioner of the State of Maryland and the Regional Director of the FDIC, from the Bank's surplus in excess of 100% of its required capital stock. In addition, restrictions are also imposed upon the ability of the Bank to make loans to the Corporation, purchase stock in the Corporation, or use the Corporation's securities as collateral for indebtedness of the Bank. Cash and Due From Banks The Federal Reserve System requires that banks maintain reserve balances based on the type and amount of deposits. At December 31, 2000 and 1999, the Bank was required to maintain reserves of $496,000 and $495,000, respectively. 14. LITIGATION At December 31, 2000, the Corporation was involved in litigation arising from normal banking, financial, and other activities of the Bank. Management, after consultation with legal counsel, does not anticipate that the ultimate liability, if any, arising out of these matters will have a material effect on the Corporation's financial condition. 15. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position. The contract amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments as well as its exposure to credit loss in the event of nonperformance by the other party. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. At December 31, 2000 and 1999, the Bank's total unfunded commitments to extend credit were $8,199,000 and $12,248,000, respectively. These commitments included unused credit card lines of credit of $3,046,000 and $6,364,000 for 2000 and 1999 respectively. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on management's credit evaluation of the counterparty. Collateral held varies but may include loans, property, equipment, commercial properties, and other business assets as may be deemed appropriate. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party and totaled $104,000 and $234,000 at December 31, 2000 and 1999, respectively. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held varies but may include accounts receivable, inventory, equipment, marketable securities, property, and other business -22- 23 assets as may be deemed appropriate. Since most of the letters of credit are expected to expire without being drawn upon, they do not necessarily represent future cash requirements. 16. FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, Disclosure About Fair Value of Financial Instruments, requires the disclosure of estimated fair values of financial instruments. Quoted market prices, where available, are shown as estimates of fair market values. Because no quoted market prices are available for a significant part of the Corporation's financial instruments, the fair values of such instruments have been derived based on the amount and timing of future cash flows and estimated discount rates. Present value techniques used in estimating the fair value of many of the Corporation's financial instruments are significantly affected by the assumptions used. The fair values derived from using present value techniques are not substantiated by comparisons to independent markets, and in many cases, could not be realized in immediate settlement of the instruments. Statement No. 107 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Corporation. The estimated fair values of the Corporation's financial instruments at December 31 are as follows:
2000 1999 -------------------------------------------------------------- Carrying Fair Carrying Fair Amount Value Amount Value ------------ ------------ ------------ ------------- Financial assets: Cash and due from banks $ 3,121,105 $ 3,121,105 $ 4,299,075 $ 4,299,075 Federal funds sold 1,577,773 1,577,773 8,769 8,769 Investment securities available for sale 43,161,640 43,161,640 44,967,011 44,967,011 Loans, net of allowance 61,474,222 61,342,592 58,302,622 58,177,783 Accrued interest receivable 916,867 916,867 868,486 868,486 Financial liabilities: Deposits 104,483,391 106,690,468 101,256,200 103,395,106 Short-term borrowings 6,050,491 6,050,491 9,556,919 9,556,919 Long-term debt 177,500 177,500 192,500 192,500 Accrued interest payable 320,626 320,626 137,064 137,064 Off-balance sheet items: Commitments to extend credit 5,153,000 5,153,000 5,884,000 5,884,000 Unused credit card lines of credit 3,046,000 3,046,000 6,364,000 6,364,000 Standby letters of credit 104,000 104,000 234,000 234,000
The following methods and assumptions were used by the Corporation in estimating its fair value disclosures for financial instruments: o Cash and due from banks, federal funds sold and time deposits: The carrying amounts reported in the balance sheet for these assets are considered to approximate their fair values. o Investment securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. o Loans: For variable-rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying amounts. The fair values for other loans (for example, fixed rate real estate, consumer and commercial and industrial loans) are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics. The carrying amount of accrued interest receivable approximates its fair value. -23- 24 o Deposits: The fair values disclosed for demand deposits (for example, interest-bearing checking and savings accounts) are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts.) The fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits. The carrying amount of accrued interest payable approximates fair value. o Federal funds purchased and other short-term borrowings: The carrying amounts approximate their fair values. o Long-term borrowings: The fair value is estimated based on interest rates currently available for borrowings with similar terms and remaining maturities. 17. PARENT COMPANY FINANCIAL INFORMATION Condensed balance sheets, statements of income and statements of cash flows for GrandBanc, Inc. (parent only) are presented below: BALANCE SHEETS
December 31, -------------------------------- 2000 1999 ----------- ----------- ASSETS: Cash $ 154,149 $ 259,558 Investments in subsidiary 8,740,381 7,806,310 Intangible assets 145,063 163,369 Deferred income taxes 504,561 400,846 ----------- ----------- TOTAL ASSETS $9,544,154 $8,630,083 =========== =========== LIABILITIES: Notes payable $ 1,877,500 $ 1,992,500 Accrued expenses and other liabilities 1,061,096 825,197 ----------- ----------- Total liabilities 2,938,596 2,817,697 ----------- ----------- STOCKHOLDERS' EQUITY: Common stock 404,959 404,959 Additional paid-in capital 10,962,879 10,962,879 Accumulated deficit (4,275,233) (3,918,210) Accumulated other comprehensive income (487,047) (1,637,242) ----------- ----------- Total stockholders' equity 6,605,558 5,812,386 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,544,154 $ 8,630,083 =========== ===========
-24- 25 STATEMENTS OF OPERATIONS
2000 1999 1998 --------- --------- --------- INCOME: Interest income $ 8,813 $ 971 $ 4,046 Other income -- -- 30,000 --------- --------- --------- Total income 8,813 971 34,046 --------- --------- --------- EXPENSES: Interest expense 184,021 170,945 215,342 Professional fees - - 28,775 Other expenses 69,404 38,011 39,776 --------- --------- --------- Total expenses 253,425 208,956 283,893 --------- --------- --------- LOSS BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARY (244,612) (207,985) (249,847) INCOME TAX BENEFIT (103,714) (80,332) (122,952) --------- --------- --------- LOSS BEFORE EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARY (140,898) (127,653) (126,895) EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARY (216,125) (142,467) 226,137 --------- ---------- --------- NET (LOSS) INCOME $(357,023) $(270,120) $ 99,242 ========= ========= =========
-25- 26 STATEMENTS OF CASH FLOWS
2000 1999 1998 --------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(357,023) $ (270,120) $ 99,242 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Equity in undistributed income of subsidiary 216,125 142,467 (416,213) Depreciation and amortization - - 26,450 Deferred income taxes (103,715) (80,332) (122,952) Net changes in: Other assets 18,306 18,307 1,494 Accrued expenses and other liabilities 235,898 554,288 19,697 --------- ----------- ----------- Net cash provided (used) in operating activities 9,591 364,610 (392,282) --------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of fixed assets -- -- 1,489,784 --------- ----------- ---------- Net cash provided by investing activities -- -- 1,489,784 --------- ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings -- 1,800,000 -- Principal payments on borrowings (115,000) (1,907,500) (1,400,000) --------- ----------- ---------- Net cash used in financing activities (115,000) (107,500) (1,400,000) --------- ----------- ----------- NET (DECREASE) INCREASE IN CASH (105,409) 257,110 (302,498) CASH AT BEGINNING OF YEAR 259,558 2,448 304,946 --------- ----------- ----------- CASH AT END OF YEAR $ 154,149 $ 259,558 $ 2,448 ========= =========== =========== Supplemental disclosures: Interest payments $ 183,229 $ 170,398 $ 200,918 ========= =========== ===========
18. PENDING MERGER On October 11, 2000, GrandBanc, Inc. ("GrandBanc") entered into an Agreement and Plan of Merger with Century Bancshares, Inc. ("Century") whereby the stockholders of GrandBanc will receive .3318 shares of the common stock of Century for each GrandBanc common share. The merger is structured as a pooling-of-interests. The transaction is subject to various regulatory approvals and the approval of the stockholders of Century and GrandBanc. -26- 27 EXHIBIT INDEX 23.1 Consent of Stegman & Company, independent auditors of GrandBanc. -27- EX-23.1 3 h90650ex23-1.txt CONSENT OF STEGMAN & COMPANY 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the incorporation by reference in Form S-8 No. 333-38127 and Form S-8 No.57940 of Century Bancshares, Inc. of our report, dated February 16 2001, included herein, relating to the consolidated financial statements of GrandBanc, Inc. as of December 31, 2000 and 1999 and each of the years in the three year period ended December 31, 2000. /s/ Stegman & Company Baltimore, Maryland September 13, 2001 -28- -----END PRIVACY-ENHANCED MESSAGE-----