-----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, SnkcMzYg+k+Sk/TUsxG7kV6W5EtI1VfrOa/V/AmeZKOfglUrqK/j1TL2PaGSOtiU dJDi9AgabEgkG4Rt/qj8eA== /in/edgar/work/0000835012-00-000004/0000835012-00-000004.txt : 20001115 0000835012-00-000004.hdr.sgml : 20001115 ACCESSION NUMBER: 0000835012-00-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMONWEALTH BANKSHARES INC CENTRAL INDEX KEY: 0000835012 STANDARD INDUSTRIAL CLASSIFICATION: [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: 766297 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 0001.txt 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 September 30, 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 incorporation or organization) Identification No.) 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 -- 1,678,466 shares as of September 30, 2000 INDEX COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY NORFOLK, VIRGINIA PART 1. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets -- September 30, 2000 and December 31, 1999. Condensed consolidated statements of income -- Three months ended September 30, 2000 and 1999; Nine months ended September 30, 2000 and 1999. Condensed consolidated statements of comprehensive income -- Nine months ended September 30, 2000 and 1999. Condensed consolidated statements of cash flows -- Nine months ended September 30, 2000 and 1999. Notes to condensed consolidated financial statements -- September 30, 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 1. FINANCIAL INFORMATION COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30 December 31 2000 1999 (Dollars in thousands) ASSETS Cash and due from banks $ 6,933 $ 6,321 Federal funds sold 2,690 -- Investment Securities: Available for sale 15,033 15,478 Held to maturity 4,411 4,707 Equity securities, restricted 662 548 ------- ------- TOTAL INVESTMENT SECURITIES 20,106 20,733 Loans: Commercial 24,214 23,307 Commercial construction 4,195 1,712 Commercial mortgage 76,025 65,986 Residential mortgage 31,293 25,146 Installment loans to individuals 10,441 6,538 Other 2,774 2,817 ------- ------- GROSS LOANS 148,942 125,506 Unearned income (507) (461) Allowance for loan losses (1,003) (931) ------- ------- NET LOANS 147,432 124,114 Premises and equipment 4,081 2,822 Real estate acquired in settlement of loans 295 601 Other assets 3,280 2,425 ------- ------- $184,817 $138,358 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest bearing $ 17,725 $ 15,072 Interest bearing 143,352 123,286 ------- ------- TOTAL DEPOSITS 161,077 138,358 Short-term borrowings 7,725 4,156 Long-term debt 505 531 Other liabilities 2,309 1,744 ------- ------- TOTAL LIABILITIES 171,616 144,789 SHAREHOLDERS' EQUITY Common stock, par value $2.50 a share Authorized--5,000,000 shares Issued and outstanding 1,678,466 shares in 2000 and 1,644,743 shares issued and outstanding in 1999. 4,196 4,112 Additional paid-in-capital 5,383 5,275 Retained earnings 4,044 3,368 Net unrealized loss on securities available for sale (422) (528) ------- ------- 13,201 12,227 ------- ------- $184,817 $157,016 ======= =======
[FN] See notes to condensed consolidated financial statements.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three months ended Nine months ended September 30 September 30 September 30 September 30 2000 1999 2000 1999 (Dollars in thousands) (Dollars in thousands) Interest income: Loans, including fees $ 3,316 $ 2,433 $ 9,403 $ 6,794 Investment securities 300 318 911 982 Other 53 5 206 44 ------ ------ ------ ------ TOTAL INTEREST INCOME 3,669 2,756 10,520 7,820 Interest expense: Deposits 1,979 1,300 5,522 3,805 Short-term borrowing 102 50 215 98 Other 8 16 24 30 ------ ------ ------ ------ TOTAL INTEREST EXPENSE 2,089 1,366 5,761 3,933 ------ ------ ------ ------ NET INTEREST INCOME 1,580 1,390 4,759 3,887 Provision for loan losses 48 30 138 80 ------ ------ ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,532 1,360 4,621 3,807 Other income: Service charges on deposit accounts 186 224 530 595 Other service charges and fees 117 62 263 163 Realized gain on securities available for sale -- -- -- 7 Loss on sale of real estate acquired in settlement of loans (15) (1) (20) (28) Other income 49 48 121 149 ------ ------ ------ ------ 337 333 894 886 Other expenses: Salaries and employee benefits 729 597 2,117 1,696 Net occupancy 175 123 409 333 Furniture and equipment expenses 181 144 487 429 Other expenses 464 417 1,349 1,088 ------ ------ ------ ------ 1,549 1,281 4,362 3,546 ------ ------ ------ ------ INCOME BEFORE INCOME TAXES 320 412 1,153 1,147 Applicable income taxes 67 106 302 299 ------ ------ ------ ------ NET INCOME $ 253 $ 306 $ 851 $ 848 ====== ====== ====== ====== Per share data: Basic $ 0.15 $ 0.19 $ 0.51 $ 0.52 ====== ====== ====== ====== Diluted $ 0.14 $ 0.17 $ 0.46 $ 0.47 ====== ====== ====== ====== Dividends per share $ 0.035 $ 0.035 $ 0.105 $ 0.070 ====== ====== ====== ====== Average shares outstanding: Basic 1,673,828 1,630,015 1,663,553 1,630,015 ========= ========= ========= ========= Diluted 1,861,466 1,800,739 1,843,372 1,800,739 ========= ========= ========= =========
[FN] See notes to condensed consolidated financial statements
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Nine months ended September 30 September 30 2000 1999 (Dollars in thousands) Net income $851 $848 Other comprehensive income, net of tax: Unrealized gain (loss) on securities available for sale 105 (369) --- --- COMPREHENSIVE INCOME $956 $479 === ===
[FN] See notes to condensed consolidated financial statements.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months ended September 30 September 30 2000 1999 (Dollars in thousands) OPERATING ACTIVITIES Net income $ 851 $ 848 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 138 80 Depreciation and amortization 340 291 Realized gain on securities available for sale -- (7) Write down of real estate acquired in settlement of loans 8 -- Loss on sale of real estate acquired in settlement of loans 12 28 Decrease (increase) in interest receivable 12 (82) Increase in interest payable 189 77 Loss on disposal of fixed assets 4 1 Other (545) 339 ----- ----- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,009 1,575 INVESTING ACTIVITIES Net decrease (increase) in short term investments (2,690) 7,192 Purchase of investment equities, restricted securities (114) -- Purchase of securities available for sale (250) (3,854) Proceeds from: Maturity of securities available for sale 854 2,138 Maturity of securities held to maturity 296 867 Sale of securities available for sale -- 1,949 Sale of real estate acquired in settlement of loans 370 115 Sale of premises and equipment -- 15 Purchase of assets relating to real estate acquired in settlement of loans (84) (19) Decrease from net change in loans (23,404) (21,680) Purchase of premise and equipment (1,603) (383) ------ ------ NET CASH USED BY INVESTING ACTIVITIES (26,625) (13,660) FINANCING ACTIVITIES Increase from net change in demand deposits and savings accounts 3,052 123 Increase from net change in certificates of deposit 19,667 5,492 Principal payments on long-term debt (26) (26) Increase from net change in short-term borrowings 3,569 6,344 Proceeds from sale of stock 61 61 Cash paid for dividends (95) (69) ------ ------ NET CASH PROVIDED BY FINANCING ACTIVITIES 26,228 11,925 ------ ------ NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 612 (160) Cash and due from banks at January 1 6,321 5,383 ------ ------ CASH AND DUE FROM BANKS AT SEPTEMBER 30 $ 6,933 $ 5,223 ====== ======
[FN] See notes to condensed consolidated financial statements. COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) September 30, 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 nine months ended September 30, 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. NOTE C--RELATED PARTY TRANSACTION A new branch was opened during the quarter ended September 30, 2000. The facility is leased from an entity in which two of the Company's directors have an ownership interest. The terms of the lease are comparable with the commercial real estate market. PART I ITEM 2. Management's discussion and analysis of financial conditions and results of operations. EARNINGS SUMMARY Net income for the quarter ended September 30, 2000 totaled $253,000, as compared with $306,000 in the third quarter of 1999. On a per share basis, third quarter 2000 income was 15 cents compared with 19 cents for 1999. Net income for the nine months ended September 30, 2000 totaled $851,000, as compared to $848,000 for the nine months ended September 30, 1999. On a per share basis, net income equaled 51 cents for 2000 and 52 cents for 1999. Total interest for the first nine months of 2000 increased to $10,520,000, a $2,700,000 or 34.5% increase over the first nine months of 1999. These items are discussed in more detail later in this report. NET INTEREST INCOME Net interest income was $1,580,000 for the quarter ended September 30, 2000 an increase of $190,000 over the comparable period in 1999. For the nine months ended September 30, 2000, net interest income increased to $4,759,000, an increase of $872,000 over 1999. Total interest income was $3,669,000 for the quarter ended September 30, 2000 an increase of $913,000 over the same period in 1999. Interest income for the nine months ended September 30, 2000 increased by $2,700,000 over the same period of 1999. This increase is mainly attributable to a 31.0% increase in total loans when comparing September 30, 2000 to September 30, 1999. Interest expense of $2,089,000 for the quarter ended September 30, 2000 represents an $723,000 increase from the comparable period in 1999. For the nine months ended September 30, 2000, interest expense increased by $1,828,000 over the same period of 1999. This increase is attributable to a 34.4% increase in interest bearing deposits when comparing September 30, 2000 to September 30, 1999. PROVISION FOR LOAN LOSSES The provision for loan losses was $138,000 for the first nine months of 2000 compared to $80,000 for the same period of 1999. Loan charge offs for the nine months ended September 30, 2000 totaled $71,000 and recoveries for the same period totaled $5,000. At September 30, 2000, Bank of the Commonwealth had a total allowance for loan losses of $1,003,000 or .67% of total loans. OTHER INCOME Other income for the quarter ended September 30, 2000 was $337,000, an increase of $4,000 from the $333,000 reported for the three months ended September 30, 1999. For the nine months ended September 30, 2000, other income was $894,000 as compared to $886,000 for the nine months ended September 30, 1999. OTHER EXPENSES Other expenses for the quarter ended September 30, 2000 totaled $1,549,000, an increase of $268,000 or 20.9% over the $1,281,000 recorded during the quarter ended September 30, 1999. For the nine months ended September 30, 2000, other expenses increased to $4,362,000 from the $3,546,000 recorded for the same period of 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: September 30, 2000 December 31, 1999 Loans past due 90 days or more and still accruing $ 67,000 $ 73,000 Nonaccrual loans 1,640,000 1,109,000 Other real estate owned 295,000 601,000 --------- --------- Total nonperforming $2,002,000 $1,783,000 ========= ========= CAPITAL POSITION Shareholder's equity for the Corporation increased to $13,201,000 from $12,227,000 or 8.0% from December 31, 1999 to September 30, 2000. Shareholders' equity for September 30, 2000 reflects a $422,000 net unrealized loss on securities available for sale in accordance with FASB 115, as compared to a $528,000 net unrealized loss as of December 31, 1999. Bank Holding Companies are required to meet a 8.0% risk-based capital standard. The Corporation's risk based capital was 9.0% as of September 30, 2000. STOCK DIVIDEND At the September 2000 Board of Directors' meeting, a 3.5 cents per share cash dividend was declared, payable on September 29, 2000 to shareholders of record on September 25, 2000. 299 shareholders representing 764,914 shares participated in the September 29, 2000 Dividend Reinvestment Plan and 18 shareholders participated in the Stock Purchase Plan for a total of $3,000. SUMMARY As of September 30, 2000, 70.1% of the Bank's loan portfolio consisted of commercial loans which are considered to provide higher yields and also generally carry a greater risk. It should be noted that 76.8% of these commercial loans are collateralized with real estate, and accordingly do not represent an unfavorable risk. At September 30, 2000, 74.9% of the Bank's total loan portfolio consisted 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 September 30, 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: November 14, 2000 /s/ ------------------------------- E. J. Woodard, Jr. Chairman of the Board, President & CEO Date: November 14, 2000 /s/ ------------------------------- John H. Gayle Executive Vice President & Cashier EX-9 2 0002.txt [ARTICLE] 9 [PERIOD-TYPE] 9-MOS [FISCAL-YEAR-END] DEC-31-2000 [PERIOD-END] SEP-30-2000 [CASH] 6,658 [INT-BEARING-DEPOSITS] 275 [FED-FUNDS-SOLD] 2,690 [TRADING-ASSETS] 0 [INVESTMENTS-HELD-FOR-SALE] 15,033 [INVESTMENTS-CARRYING] 4,411 [INVESTMENTS-MARKET] 4,272 [LOANS] 148,942 [ALLOWANCE] 1,003 [TOTAL-ASSETS] 184,817 [DEPOSITS] 161,077 [SHORT-TERM] 7,725 [LIABILITIES-OTHER] 2,309 [LONG-TERM] 505 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 4,196 [OTHER-SE] 9,005 [TOTAL-LIABILITIES-AND-EQUITY] 184,817 [INTEREST-LOAN] 9,403 [INTEREST-INVEST] 911 [INTEREST-OTHER] 206 [INTEREST-TOTAL] 10,520 [INTEREST-DEPOSIT] 5,522 [INTEREST-EXPENSE] 5,761 [INTEREST-INCOME-NET] 4,759 [LOAN-LOSSES] 138 [SECURITIES-GAINS] 0 [EXPENSE-OTHER] 4,362 [INCOME-PRETAX] 1,153 [INCOME-PRE-EXTRAORDINARY] 1,153 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 851 [EPS-BASIC] .51 [EPS-DILUTED] .46 [YIELD-ACTUAL] 8.71 [LOANS-NON] 1,640 [LOANS-PAST] 67 [LOANS-TROUBLED] 0 [LOANS-PROBLEM] 1,205 [ALLOWANCE-OPEN] 931 [CHARGE-OFFS] 71 [RECOVERIES] 5 [ALLOWANCE-CLOSE] 1,003 [ALLOWANCE-DOMESTIC] 1,003 [ALLOWANCE-FOREIGN] 0 [ALLOWANCE-UNALLOCATED] 769
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