-----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, N0NguZCsCHWkJyjfsgnRbwb+1dAJRVyQbTQqoPwuN+cAocT395hR6g6/zqOo3IIK PB8mGuvtjTOMS7uMcasebg== 0000835012-00-000002.txt : 20000511 0000835012-00-000002.hdr.sgml : 20000511 ACCESSION NUMBER: 0000835012-00-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000510 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: SEC FILE NUMBER: 000-17377 FILM NUMBER: 624845 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, 2000 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) (757) 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 -- 1,664,216 shares as of March 31, 2000 INDEX COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY NORFOLK, VIRGINIA PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets -- March 31, 2000 and December 31, 1999. Condensed consolidated statements of income -- Three months ended March 31, 2000 and 1999. Condensed consolidated statements of comprehensive income -- Three months ended March 31, 2000 and 1999. Condensed consolidated statements of cash flows -- Three months ended March 31, 2000 and 1999. Notes to condensed consolidated financial statements -- March 31, 2000. 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 2000 1999 ASSETS (Dollars in Thousands) Cash and due from banks $ 5,602 $ 6,321 Federal funds sold 6,999 -- Investment securities: Available for sale 15,268 15,478 Held to maturity 4,628 4,707 Equity securities, restricted 548 548 ------ ------ TOTAL INVESTMENT SECURITIES 20,444 20,733 Loans: Commercial 97,861 91,005 Residential Mortgage 26,974 25,146 Installment loans to individuals 6,606 6,538 Other 2,836 2,817 ------- ------- GROSS LOANS 134,272 125,506 Unearned income (483) (461) Allowance for loan losses (979) (931) ------- ------- NET LOANS 132,810 124,114 Premises and equipment 2,984 2,822 Real estate acquired in settlement of loans 632 601 Other assets 2,736 2,425 ------- ------- $172,207 $157,016 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest bearing $18,056 $15,072 Interest bearing 135,486 123,286 ------- ------- TOTAL DEPOSITS 153,542 138,358 Short-term borrowings 3,408 4,156 Long-term debt 505 531 Other liabilities 2,155 1,744 ------- ------- TOTAL LIABILITIES 159,610 144,789 SHAREHOLDERS' EQUITY Common stock, par value $2.50 a share Authorized--5,000,000 shares Issued and outstanding 1,664,216 shares in 2000 and 1,644,743 shares in 1999 4,161 4,112 Additional paid-in capital 5,331 5,275 Retained earnings 3,602 3,368 Accumulated other comprehensive loss (497) (528) ------- ------- 12,597 12,227 ------- ------- $172,207 $157,016 ======= ======= 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 2000 1999 Interest income: (Dollars in thousands) Loans, including fees $ 2,934 $ 2,089 Investment securities 309 342 Other 62 28 ----- ----- TOTAL INTEREST INCOME 3,305 2,459 Interest expense: Deposits 1,721 1,241 Federal funds purchased 38 20 Other 8 7 ----- ----- TOTAL INTEREST EXPENSE 1,767 1,268 ----- ----- NET INTEREST INCOME 1,538 1,191 Provision for loan losses 45 30 ----- ----- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,493 1,161 Other income: Service charges on deposit accounts 163 172 Other service charges and fees 67 47 Realized gain on securities available for sale -- 3 Loss on sale of real estate acquired in settlement of loans (2) -- Other income 39 53 ----- ----- 267 275 Other expenses: Salaries and employee benefits 652 547 Net occupancy 125 108 Furniture and equipment expenses 151 136 Other expenses 428 309 ----- ----- 1,356 1,100 ----- ----- INCOME BEFORE INCOME TAXES 404 336 Applicable income taxes 111 84 ----- ----- NET INCOME $293 $252 ===== ===== Per share data(1): Basic $0.18 $0.15 ===== ===== Diluted $0.16 $0.14 ===== ===== Dividends per share $.035 $0.00 ===== ===== Average shares outstanding (1): Basic 1,651,102 1,626,107 ========= ========= Diluted 1,815,198 1,784,319 ========= ========= (1) Restated to reflect 1999 stock dividend.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three months ended March 31 March 31 2000 1999 (Dollars in thousands) Net income $ 293 $ 252 Other comprehensive income, net of income tax: Unrealized gain (loss) on securities available for sale 31 (54) ----- ----- COMPREHENSIVE INCOME $ 324 $ 198
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31 March 31 2000 1999 (Dollars in thousands) OPERATING ACTIVITIES Net income $ 293 $ 252 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses 45 30 Depreciation and amortization 108 91 Realized loss on securities available for sale -- (3) Write down of real estate acquired in settlement of loans 2 -- Increase in interest receivable (158) (106) Increase in interest payable 55 55 Loss of disposal of fixed assets -- 1 Other 188 414 ----- ----- NET CASH PROVIDED BY OPERATING ACTIVITIES 533 734 INVESTING ACTIVITIES Net decrease (increase) in short term investments (6,999) 7,320 Purchase of investment equities, restricted securities -- (3,587) Proceeds from: Maturity of investment securities available for sale 256 1,202 Maturity of investment securities held to maturity 79 300 Sale of investment securities available for sale -- 1,725 Purchase of assets relating to real estate acquired in settlement of loans (33) (14) Decrease from net change in loans (8,690) (6,143) Purchases of premises and equipment (270) (77) ----- ----- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (15,657) 726 FINANCING ACTIVITIES Increase (decrease) from net change in demand deposits and savings accounts 5,032 (2,147) Increase (decrease) from net change in certificate of deposit 10,152 (559) Principal payments on long-term debt (26) (26) Increase (decrease) from net change in short-term borrowings (748) 1,774 Proceeds from sale of stock 27 -- Cash paid for dividends (32) -- ------ ------ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 14,405 (958) ------ ------ NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (719) 502 Cash and due from banks at January 1 6,321 5,383 ------ ------ CASH AND DUE FROM BANKS AT MARCH 31 $ 5,602 $ 5,885 ====== ====== See notes to condensed consolidated financial statements.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 2000 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, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 1999. NOTE B -- EARNINGS PER SHARE Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average of common and potential dilutive common equivalent shares outstanding during the period. Average shares outstanding for 1999 and calculation of income per share is restated to reflect a 50% stock dividend paid on May 27, 1999. 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, 2000 totaled $293,000, as compared with $252,000 for the first three months of 1999. On a per share basis, net income equaled 18 cents for 2000 compared to 15 cents for 1999. Total interest for the first three months of 2000 increased to $3,305,000, an $846,000 or 34.4% increase over the first three months of 1999. The items are discussed in more detail later in this report. NET INTEREST INCOME Net interest income was $1,538,000 for the quarter ended March 31, 2000, an increase of 29.1% over the comparable period in 1999. Total interest income was $3,305,000 for the quarter ended March 31, 2000 representing a 34.4% increase from the comparable period in 1999. This increase is mainly attributable to a 37.0% increase in total loans when comparing March 31, 2000 to March 31, 1999. Interest expense of $1,767,000 for the quarter ended March 31, 2000 represents a 39.4% increase from the comparable period in 1999. This increase is attributable to a 36.1% increase in interest bearing deposits when comparing March 31, 2000 to March 31, 1999. PROVISION FOR LOAN LOSSES The provision for loan losses was $45,000 for the first three months of 2000 as compared to $30,000 for the first quarter of 1999. At March 31, 2000, Bank of the Commonwealth had a total allowance for loan losses of $979,000 or .73% of total loans. OTHER INCOME Other income for the quarter ended March 31, 2000 was $267,000, a decrease of $8,000 from the $275,000 reported for the three months ended March 31, 1999. OTHER EXPENSES Other expenses for the quarter ended March 31, 2000 was $1,356,000, an increase of $256,000 from the $1,100,000, for the quarter ended March 31, 1999. 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, 2000 December 31,1999 Loans past due 90 days or more and still accruing $ 29,000 $ 73,000 Nonaccrual loans 1,107,000 1,109,000 Other real estate owned 632,000 601,000 --------- --------- Total nonperforming $1,768,000 $1,783,000 ========= ========= CAPITAL POSITION Shareholders' Equity for the Corporation increased to $12,597,000 from $12,227,000 or 3.0% from December 31, 1999 to March 31, 2000. Shareholders' Equity for March 31, 2000 reflects a $497,000 net unrealized loss on securities available for sale in accordance with FASB115, as compared to a $528,000 net unrealized loss as of December 31, 1999. Bank Holding Companies are required to meet a 7.25% risk-based capital standard. The Corporation's risk based capital was 9.5% as of March 31, 2000. STOCK DIVIDEND The Board of Directors, at their March 2000 meeting declared a 3.5 cent cash dividend payable on the Company's common shares for stockholders of record as of March 28, 2000, on March 31, 2000. SUMMARY As of March 31, 2000, 72.9% 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 74.6% of these commercial loans are collateralized with real estate, and accordingly do not represent an unfavorable risk. At March 31, 2000, 74.0% 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, 2000. 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 10, 2000 /S/ ------------------------------- E. J. Woodard, Jr., Chairman of the Board, President & CEO Date: May 10, 2000 /S/ ------------------------------ John H. Gayle Executive Vice President and Cashier EX-9 2 [ARTICLE] 9 [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] DEC-31-2000 [PERIOD-END] MAR-31-2000 [CASH] 5404 [INT-BEARING-DEPOSITS] 198 [FED-FUNDS-SOLD] 6999 [TRADING-ASSETS] 0 [INVESTMENTS-HELD-FOR-SALE] 15268 [INVESTMENTS-CARRYING] 4628 [INVESTMENTS-MARKET] 4450 [LOANS] 134272 [ALLOWANCE] 979 [TOTAL-ASSETS] 172207 [DEPOSITS] 153542 [SHORT-TERM] 3408 [LIABILITIES-OTHER] 2155 [LONG-TERM] 505 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 4161 [OTHER-SE] 8436 [TOTAL-LIABILITIES-AND-EQUITY] 172207 [INTEREST-LOAN] 2934 [INTEREST-INVEST] 309 [INTEREST-OTHER] 62 [INTEREST-TOTAL] 3305 [INTEREST-DEPOSIT] 1721 [INTEREST-EXPENSE] 1767 [INTEREST-INCOME-NET] 1538 [LOAN-LOSSES] 45 [SECURITIES-GAINS] 0 [EXPENSE-OTHER] 1356 [INCOME-PRETAX] 404 [INCOME-PRE-EXTRAORDINARY] 293 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 293 [EPS-BASIC] .18 [EPS-DILUTED] .16 [YIELD-ACTUAL] 8.59 [LOANS-NON] 1107 [LOANS-PAST] 29 [LOANS-TROUBLED] 0 [LOANS-PROBLEM] 2250 [ALLOWANCE-OPEN] 931 [CHARGE-OFFS] 0 [RECOVERIES] 3 [ALLOWANCE-CLOSE] 979 [ALLOWANCE-DOMESTIC] 979 [ALLOWANCE-FOREIGN] 0 [ALLOWANCE-UNALLOCATED] 277
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