-----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, V5Atk1uY1CSOmL0CejaX5cZ7jbANXAj/VEOpOOicGiGLqQ8hz1i0vkD0jShEQeUP I+oA8tj7JrnA/GDUg1gD5Q== 0000835012-96-000004.txt : 19960515 0000835012-96-000004.hdr.sgml : 19960515 ACCESSION NUMBER: 0000835012-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMONWEALTH BANKSHARES INC CENTRAL INDEX KEY: 0000835012 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 541460991 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-17377 FILM NUMBER: 96563751 BUSINESS ADDRESS: STREET 1: 403 BOUSH ST CITY: NORFOLK STATE: VA ZIP: 23510 BUSINESS PHONE: 8044466900 MAIL ADDRESS: STREET 2: 403 BOUSH STREET CITY: NORFOLK STATE: VA ZIP: 23510 10QSB 1 FORM 10-QSB U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 Commission file number 01-17377 COMMONWEALTH BANKSHARES INC. (Exact name of small business issuer as specified in its charter) VIRGINIA 54-1460991 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 403 Boush Street Norfolk, Virginia 23510 (Address of principal executive offices) (Zip Code) (804) 446-6900 Issuer's telephone number Not Applicable (Former name, former address and former fiscal year, if changed since last report.) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter periods 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Common Stock, $2.50 Par Value -- 894,103 shares as of March 31, 1996 INDEX COMMONWEALTH BANKSHARES INC. AND SUBSIDIARY NORFOLK, VIRGINIA PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets -- March 31, 1996 and December 31, 1995. Condensed consolidated statements of income -- Three months ended March 31, 1996 and 1995. Condensed consolidated statements of cash flows -- Three months ended March 31, 1996 and 1995. Notes to condensed consolidated financial statements -- March 31, 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on 8-K SIGNATURES PART I. FINANCIAL INFORMATION COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31 December 31 1996 1995 ASSETS Cash and due from banks $ 7,039 $ 5,135 Federal funds sold 7,044 5,132 Securities: Available for sale 6,621 5,968 Held to maturity 11,277 11,290 ------- ------- NET SECURITIES 17,898 17,258 Loans: Commercial 37,997 36,156 Residential Mortgage 18,762 18,668 Installment loans to individuals 3,776 3,970 Other 2,531 2,809 ------- ------- GROSS LOANS 63,066 61,603 Unearned income (207) (230) Allowance for loan losses (1,274) (1,256) ------- ------- NET LOANS 61,585 60,117 Premises and equipment 2,316 2,341 Real estate acquired in settlement of loans 3,521 3,467 Other assets 1,557 1,587 ------- ------- $100,960 $95,037 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest bearing $ 13,900 $ 13,147 Interest bearing 73,761 69,109 ------- ------- TOTAL DEPOSITS 87,661 82,256 Federal funds purchased and securities sold under agreement to repurchase 2,581 2,290 Long-term debt 609 684 Other liabilities 1,153 1,036 ------- ------- TOTAL LIABILITIES 92,004 86,266 SHAREHOLDERS' EQUITY Common stock, par value $2.50 a share Authorized--1,500,000 shares Issued and outstanding 894,103 shares in 1996 and 1995 2,235 2,235 Additional paid-in capital 3,716 3,716 Retained earnings 3,030 2,812 Net unrealized gain (loss) on securities available for sale (25) 8 ------- ------- 8,956 8,771 $100,960 $ 95,037 See notes to condensed consolidated financial statements.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three months ended March 31 March 31 1996 1995 (Dollars in thousands) Interest income: Loans, including fees $ 1,522 $ 1,344 Securities 235 212 Other 90 21 ------- ------- TOTAL INTEREST INCOME 1,847 1,577 Interest expense: Deposits 958 759 Federal funds purchased 24 22 Other 10 10 ------- ------- TOTAL INTEREST EXPENSE 992 791 ------- ------- NET INTEREST INCOME 855 786 Provision for loan losses 30 23 ------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 825 763 Other income: Service charges on deposit accounts 121 100 Other service charges and fees 13 8 Loss on sale of securities available for sale (5) (1) Gain on sale of real estate acquired in settlement of loans 6 0 Other income 67 58 ------- ------- 202 165 Other expenses: Salaries and employee benefits 367 344 Net occupancy 64 66 Furniture and equipment expenses 94 95 Other expenses 192 195 ------- ------- 717 700 ------- ------- INCOME BEFORE INCOME TAXES 310 228 ------- ------- Applicable income taxes 91 58 ------- ------- NET INCOME $219 $170 Net income per share $0.24 $0.19 Dividends per share 0 0 Average shares outstanding 894,103 894,103 (1) Restated to reflect 1995 stock dividend.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31 March 31 1996 1995 (Dollars in thousands) OPERATING ACTIVITIES Net income $ 219 $ 170 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses 30 23 Depreciation and amortization 73 48 Loss on sale of securities available for sale 5 1 Gain on sale of real estate acquired in settlement of loans (6) --- (Increase) decrease in interest payable (22) 55 Increase in interest payable 32 8 Other 154 (114) ------ ------ NET CASH PROVIDED BY OPERATING ACTIVITIES 485 191 INVESTING ACTIVITIES Net increase in short term investments (1,912) (610) Purchase of securities held to maturity (1,213) (1,159) Maturity of securities available for sale 519 500 Proceeds from sale of real estate acquired in settlement of loans 123 68 Purchase of assets relating to real estate acquired in settlement (171) --- of loans Decrease from net change in loans (1,498) (2,290) Purchases of premises and equipment (49) (85) ------ ------ NET CASH USED BY INVESTING ACTIVITIES (4,201) (3,576) FINANCING ACTIVITIES Increase (decrease) from net change in demand deposits and 1,175 (1,306) savings accounts Increase from net change in certificate of deposit 4,230 3,133 Principal payments on long-term debt (75) (27) Increase from net change in short-term liabilities 289 524 ------ ------ NET CASH PROVIDED BY FINANCING ACTIVITIES 5,619 2,324 NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 1,903 (1,061) Cash and due from banks at January 1 5,136 4,765 ------ ------ CASH AND DUE FROM BANKS AT MARCH 31 $ 7,039 $ 3,704 See notes to condensed consolidated financial statements.
COMMONWEALTH BANKSHARES INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1996 NOTE A -- BASIS OF PRESENTATION The accompanying unaudited condensed 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 footnotes 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. Operating results for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. NOTE B -- EARNINGS PER SHARE Earnings per common share is calculated by dividing net income by the average number of common shares outstanding during the period. Average shares outstanding for 1995 and calculation of income per share is restated to reflect a 6% stock dividend paid on April 29, 1995. PART I ITEM 2. Management's discussion and analysis of financial conditions and results of operations. EARNINGS SUMMARY Net income for the three months ended March 31, 1996 totalled $219,000, as compared with $170,000 for the first three months of 1995. This increase represents a 28.8% increase. On a per share basis, net income equalled .24 cents for 1996 compared to .19 cents for 1995. Total interest for the first three months of 1996 increased to $1,847,000, a $270,000 increase or 17.12% over the first three months of 1995. NET INTEREST INCOME Net interest income was $855,000 for the quarter ended March 31, 1996, an increase of 8.8% over the comparable period in 1995. Total interest income was $1,847,000 for the quarter ended March 31, 1996 representing a 17.1% increase from the comparable period in 1995. Interest expense of $992,000 for the quarter ended March 31, 1996 represents a 25.4% increase from the comparable period in 1995. PROVISION FOR LOAN LOSSES The provision for loan losses was $30,000 for the first quarter of 1996 as compared to $23,000 in the first quarter of 1995. At March 31, 1996, Bank of the Commonwealth had a total allowance for loan losses of $1,274,000 or 2% of total loans, compared with $1,256,000 or 2.1% of total loans at December 31, 1995. OTHER INCOME Other income for the quarter ended March 31, 1996 was $202,000, an increase of $37,000 from the $165,000 reported for the three months ended March 31, 1995. OTHER EXPENSES Other expenses increased by 2.4% to $717,000 from $700,000, for the quarter ended March 31, 1996 as compared to the quarter ended March 31, 1995 which is attributable to normal increases in operating expenses reflecting normal cost increases. INTEREST SENSITIVITY AND LIQUIDITY Management attempts to match rate sensitive assets to rate sensitive liabilities, by planning and controlling the mix and maturities of these assets and liabilities. The purpose of this asset/liability management is to create and maintain a proper relationship between rate sensitive assets and liabilities and also to provide adequate liquidity. Liquidity is the ability to meet customers' demand for funds. These requirements are met by the sale or maturity of existing assets, loan payments and increases in deposits. NONPERFORMING ASSETS The Bank's nonperforming assets consisted of the following: March 31, 1996 March 31, 1995 Loans past due 90 days or more and still accruing $ 35,000 $ 198,000 Nonaccrual loans 1,494,000 1,655,000 Other real estate owned 3,521,000 3,467,000 ---------- ---------- Total nonperforming $5,050,000 $5,320,000 Of the $3,521,000 in Other Real Estate Owned as of March 31, 1996, $2,000,000 or 56.8% is represented by 2712 North Mall Drive. The property is fully leased with an annual income to the Bank of $160,311. This does not include rental income for the 16% of the building occupied by Bank of the Commonwealth as a branch. CAPITAL POSITION Shareholders' Equity for the Corporation increased to $8,956,000 from $8,771,000 or 2.1% from December 31, 1995 to March 31, 1996. Shareholders' Equity for March 31, 1996 reflects a $25,000 unrealized loss on securities available for sale in accordance with FASB115, as compared to a $8,000 gain as of December 31, 1995. Bank Holding Companies are required to meet a 7.25% risk-based capital standard. The Corporations's risk based capital was 14.6% as of March 31, 1996. STOCK DIVIDEND The Board of Directors, at their March 1996 meeting voted to declare a six percent stock dividend payable on the Company's common shares for stockholders of record as of March 31, 1996, on April 30, 1996. Fractional shares will be paid in cash, based on the book value of a whole share at December 31, 1995 of $9.82. SUMMARY As of March 31, 1996 60.2% of the Bank's loan portfolio consists of commercial loans which are considered to provide higher yields and also generally carry a greater risk. It should be noted that 73.9% of these commercial loans are collateralized with real estate, and accordingly do not represent an unfavorable risk. At March 31, 1996, 74.2% of the Bank's total loan portfolio consists of loans collateralized with real estate. The Bank's commitment is to maintain the Corporation's strengths in the markets it serves during difficult economic cycles, and to act resourcefully when confronted with new challenges. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K during the three months ended March 31, 1996. 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. Commonwealth Bankshares Inc, (Registrant) Date: May 13, 1996 E. J. Woodard, Jr. E. J. Woodard, Jr., Chairman of the Board, President & CEO Date: May 13, 1996 John H. Gayle John H. Gayle Senior Vice President and Cashier EX-27 2 ARTICLE 9 FDS FOR 10-Q
9 1,000 3-MOS DEC-31-1996 MAR-31-1996 7,039 0 7,044 0 6,621 17,935 17,898 62,859 1,274 100,960 87,661 2,581 1,153 609 0 0 2,235 6,721 100,960 1,522 235 90 1,847 958 34 855 30 (5) 717 310 310 0 0 219 0.24 0.24 3.98 1,494 35 2 0 1,256 13 1 1,274 0 0 888
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