-----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, DXFkeWXi3peIafHQ01uTyu2v/MlyxTaQpYWAMsXddVS1SkA+6pzOxFLcwecaA8Zc 1IwsqmEY20XwotKIqigSOw== 0000835012-97-000003.txt : 19970514 0000835012-97-000003.hdr.sgml : 19970514 ACCESSION NUMBER: 0000835012-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 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: 97601547 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, 1997 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 incorporation or organization) No.) 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 -- 947,501 shares as of March 31, 1997 INDEX COMMONWEALTH BANKSHARES INC. AND SUBSIDIARY NORFOLK, VIRGINIA PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets -- March 31, 1997 and December 31, 1996. Condensed consolidated statements of income -- Three months ended March 31, 1997 and 1996. Condensed consolidated statements of cash flows -- Three months ended March 31, 1997 and 1996. Notes to condensed consolidated financial statements -- March 31, 1997. 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 1997 1996 (Dollars in Thousands) ASSETS Cash and due from banks $ 4,877 $ 5,656 Federal funds sold 709 5,718 Securities: Available for sale 11,318 9,590 Held to maturity 13,834 14,072 TOTAL SECURITIES 25,152 23,662 Loans: Commercial 43,882 41,744 Residential Mortgage 18,047 17,206 Installment loans to individuals 4,411 4,601 Other 2,419 2,449 GROSS LOANS 68,759 66,000 Unearned income (154) (165) Allowance for loan losses (943) (932) NET LOANS 67,662 64,903 Premises and equipment 2,448 2,443 Real estate acquired in settlement of loans 1,632 1,720 Other assets 1,637 2,068 $104,117 $106,170 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest bearing 11,390 $ 10,687 Interest bearing 78,289 79,576 TOTAL DEPOSITS 89,679 90,263 Federal funds purchased and securities sold under agreement to repurchase 2,968 3,573 Long-term debt 583 609 Other liabilities 1,283 2,157 TOTAL LIABILITIES 94,513 96,602 SHAREHOLDERS' EQUITY Common stock, par value $2.50 a share Authorized--5,000,000 shares Issued and outstanding 947,501 shares 2,369 2,369 Additional paid-in capital 4,106 4,106 Retained earnings 3,279 3,121 Net unrealized loss on securities available for sale (150) (28) 9,604 9,568 $104,117 $106,170 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 1997 1996 (Dollars in thousands) Interest income: Loans, including fees $ 1,551 $ 1,522 Securities 388 235 Other 48 90 TOTAL INTEREST INCOME 1,987 1,847 Interest expense: Deposits 1,008 958 Federal funds purchased 25 24 Other 8 10 TOTAL INTEREST EXPENSE 1,041 992 NET INTEREST INCOME 946 855 Provision for loan losses 0 30 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 946 825 Other income: Service charges on deposit accounts 111 121 Other service charges and fees 22 13 Loss on sale of securities available for sale (4) (5) Gain (Loss) on sale of real estate acquired in settlement of loans (20) 6 Other income 30 67 139 202 Other expenses: Salaries and employee benefits 435 367 Net occupancy 89 64 Furniture and equipment expenses 100 94 Other expenses 238 192 862 717 INCOME BEFORE INCOME TAXES 223 310 Applicable income taxes 65 91 NET INCOME $158 $219 Net income per share (1) $0.17 $0.23 Dividends per share 0 0 Average shares outstanding 947,501 947,501 (1) Restated to reflect 1996 stock dividend.
COMMONWEALTH BANKSHARES, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended March 31 March 31 1997 1996 (Dollars in thousands) OPERATING ACTIVITIES Net income $ 158 $ 219 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses 0 30 Depreciation and amortization 83 73 Loss on sale of securities available for sale 4 5 Loss (Gain) on sale of real estate acquired in settlement of loans 20 (6) Increase in interest receivable (148) (22) Increase (decrease)in interest payable (4) 32 Loss of disposal of fixed assets 1 0 Other (227) 154 NET CASH PROVIDED BY OPERATING ACTIVITIES (113) 485 INVESTING ACTIVITIES Net (increase) decrease in short term investments 5,009 (1,912) Purchase of securities held to maturity (1,145) (1,213) Purchase of securities available for sale (2,633) --- Maturity of securities available for sale 700 519 Maturity of securities held to maturity 100 --- Sale of securities available for sale 1,298 --- Proceeds from sale of real estate acquired in settlement of loans 100 123 Purchase of assets relating to real estate acquired in settlement of loans (32) (171) Decrease from net change in loans (2,759) (1,498) Purchases of premises and equipment (89) (49) NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 549 (4,201) FINANCING ACTIVITIES Increase from net change in demand deposits and savings accounts 181 1,175 Increase (decrease) from net change in certificate of deposit (765) 4,230 Principal payments on long-term debt (26) (75) Increase (decrease)from net change in short-term liabilities (605) 289 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,215) 5,619 NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (779) 1,903 Cash and due from banks at January 1 5,656 5,136 CASH AND DUE FROM BANKS AT MARCH 31 $ 4,877 $ 7,039 See notes to condensed consolidated financial statements.
COMMONWEALTH BANKSHARES INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1997 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, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. 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, 1996. 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 1996 and calculation of income per share is restated to reflect a 6% stock dividend paid on April 29, 1996. 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, 1997 totalled $158,000, as compared with $219,000 for the first three months of 1996. On a per share basis, net income equalled .17 cents for 1997 compared to .23 cents for 1996. Total interest for the first three months of 1997 increased to $1,988,000, a $141,000 increase or 7.6% over the first three months of 1996. The items are discussed in more detail later in this report. NET INTEREST INCOME Net interest income was $946,000 for the quarter ended March 31, 1997, an increase of 10.6% over the comparable period in 1996. Total interest income was $1,988,000 for the quarter ended March 31, 1997 representing a 7.6% increase from the comparable period in 1996. This increase is mainly attributable to a 9.0% increase in total loans when comparing March 31, 1997 to March 31, 1996. Interest expense of $1,041,000 for the quarter ended March 31, 1997 represents a 4.9% increase from the comparable period in 1996. This increase is attributable to a 6.1% increase in interest bearing deposits when comparing March 31, 1997 to March 31, 1996. PROVISION FOR LOAN LOSSES No provision for loan losses was made for the first quarter of 1997; however, $10,000 was added to the provision through recoveries on loans previously charged off. At March 31, 1997, Bank of the Commonwealth had a total allowance for loan losses of $943,000 or 1.4% of total loans. OTHER INCOME Other income for the quarter ended March 31, 1997 was $139,000, a decrease of $63,000 from the $202,000 reported for the three months ended March 31, 1996. $26,000 of this decrease is attributable to loss from the sale of real estate acquired in the settlement of loans of $20,000 in 1997, compared to a gain of $6,000 during the first quarter of 1996. An additional $36,000 of the decrease is attributable to a decrease in income for rent on real estate acquired in the settlement of loans. In November 1996 the Bank sold a parcel of property that was fully leased. This parcel of property generated $36,000 in rental income during the first quarter of 1996. OTHER EXPENSES Other expenses for the quarter ended March 31, 1997 was $862,000, an increase of $145,000, from the $717,000, for the quarter ended March 31, 1996. $70,000 of this increase is attributable to the operating expenses associated with our Kempsville Branch that opened in July of 1996. An additional $21,000 was attributable to the operation of our Trust Department that was established during the fourth quarter of 1996. 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:
Mar 31, 1997 Dec 31,1996 Loans past due 90 days or more and still accruing $569,000 $180,000 Nonaccrual loans 2,348,000 2,065,000 Other real estate owned 1,632,000 1,720,000 Total nonperforming $4,549,000 $3,965,000
CAPITAL POSITION Shareholders' Equity for the Corporation increased to $9,604,000 from $9,568,000 December 31, 1996 to March 31, 1997. Shareholders' Equity for March 31, 1997 reflects a $150,000 net unrealized loss on securities available for sale in accordance with FASB115, as compared to a $28,000 net unrealized loss as of December 31, 1996. Bank Holding Companies are required to meet a 7.25% risk-based capital standard. The Corporations's risk based capital was 13.2% as of March 31, 1997. STOCK DIVIDEND The Board of Directors, at their February 1997 meeting voted to declare a six percent stock dividend payable on the Company's common shares for stockholders of record as of March 31, 1997, on April 30, 1997. Fractional shares will be paid in cash, based on the book value of a whole share at December 31, 1996 of $10.10. SUMMARY As of March 31, 1997 63.8% 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 68.9% of these commercial loans are collateralized with real estate, and accordingly do not represent an unfavorable risk. At March 31, 1997, 70.2% 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, 1997. 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, 1997 E. J. Woodard, Jr., Chairman of the Board, President & CEO Date: May 13, 1997 John H. Gayle Executive Vice President and Cashier EX-9 2 [ARTICLE] 9 [MULTIPLIER] 1,000 [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-END] MAR-31-1997 [CASH] 4,877 [INT-BEARING-DEPOSITS] 0 [FED-FUNDS-SOLD] 709 [TRADING-ASSETS] 0 [INVESTMENTS-HELD-FOR-SALE] 11,318 [INVESTMENTS-CARRYING] 13,834 [INVESTMENTS-MARKET] 25,152 [LOANS] 68,605 [ALLOWANCE] 943 [TOTAL-ASSETS] 104,117 [DEPOSITS] 89,679 [SHORT-TERM] 2,968 [LIABILITIES-OTHER] 1,283 [LONG-TERM] 583 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 2,369 [OTHER-SE] 7,235 [TOTAL-LIABILITIES-AND-EQUITY] 104,117 [INTEREST-LOAN] 1,551 [INTEREST-INVEST] 388 [INTEREST-OTHER] 48 [INTEREST-TOTAL] 1,987 [INTEREST-DEPOSIT] 1,008 [INTEREST-EXPENSE] 8 [INTEREST-INCOME-NET] 946 [LOAN-LOSSES] 0 [SECURITIES-GAINS] (4) [EXPENSE-OTHER] 862 [INCOME-PRETAX] 223 [INCOME-PRE-EXTRAORDINARY] 223 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 158 [EPS-PRIMARY] .17 [EPS-DILUTED] .17 [YIELD-ACTUAL] 8.00 [LOANS-NON] 2,348 [LOANS-PAST] 569 [LOANS-TROUBLED] 1,825 [LOANS-PROBLEM] 0 [ALLOWANCE-OPEN] 932 [CHARGE-OFFS] 0 [RECOVERIES] 11 [ALLOWANCE-CLOSE] 943 [ALLOWANCE-DOMESTIC] 0 [ALLOWANCE-FOREIGN] 0 [ALLOWANCE-UNALLOCATED] 0
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