-----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, Txfy/KeEQgHJETpeZ7+nFPAoraXQnEIOZnyvA8lEm7jeWW+1iDjdP05H9tDUgNh6 COdzc3BuPWxGlMB9HOYYWg== 0001002105-98-000080.txt : 19980518 0001002105-98-000080.hdr.sgml : 19980518 ACCESSION NUMBER: 0001002105-98-000080 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDEPENDENT COMMUNITY BANKSHARES INC CENTRAL INDEX KEY: 0000914138 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 541696103 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24159 FILM NUMBER: 98625498 BUSINESS ADDRESS: STREET 1: 111 W WASHINGTON ST STREET 2: C/O MIDDLEBURG BANK CITY: MIDDLEBURG STATE: VA ZIP: 22117 BUSINESS PHONE: 5406876377 MAIL ADDRESS: STREET 1: 111 WEST WASHINGTON STREET STREET 2: C/O MIDDLEBURG BANK CITY: MIDDLEBURG STATE: VA ZIP: 22117 10QSB 1 10QSB - INDEPENDENT COMMUNITY BANKSHARES, INC. U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998 [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to _____________ Commission file number: 0-24159 INDEPENDENT COMMUNITY BANKSHARES, INC. (Exact Name of Small Business Issuer as Specified in its Charter) Virginia 54-1696103 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 111 West Washington Street Middleburg, Virginia 22117 (Address of Principle Executive Offices) (540) 687-6377 (Issuer's Telephone Number, Including Area Code) 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 period 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 _____ State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 1,812,594 shares of common stock, par value $5.00 per share, outstanding as of May 12, 1998 * This Form 10-QSB also covers 276,600 Contractual Rights to Contingent Merger Consideration, which are registered under the Securities Act of 1933, as amended, pursuant to a registration statement declared effective on June 27, 1997. INDEPENDENT COMMUNITY BANKSHARES, INC. INDEX
Part I. Financial Information Page No. Item 1. Financial Statements Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Changes in Shareholder's Equity 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Results of Operation and Financial Condition 11 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 13 Signature 14
2 Independent Community Bankshares, Inc. Consolidated Balance Sheets (000's omitted)
(Unaudited) March 31, December 31, 1998 1997 ------------ ------------- Assets: Cash and due from banks $ 6,642 $ 6,584 Securities (fair value: March 31, 1998, $63,061, December 31, 1997 , $63,958) 62,795 64,422 Federal funds sold - 1,300 Loans, net 107,010 103,253 Bank premises and equipment, net 5,564 5,527 Other assets 3,897 3,774 ------------ ------------ Total assets $ 185,908 $ 184,860 ============ ============ Liabilities and Shareholders' Equity Liabilities: Deposits: Non-interest bearing $ 26,757 $ 26,602 Interest bearing 130,243 129,952 ------------ ------------ Total deposits $ 157,000 $ 156,554 Securities sold under agreements to Repurchase $ 1,812 $ 3,048 Federal Home Loan Bank advances 4,000 2,800 Other liabilities 822 773 ------------ ------------ Total liabilities $ 163,634 $ 163,175 Shareholders' Equity Common stock par value $5.00 per share, authorized 10,000,000 shares; issued and outstanding at March 31, 1998 - 1,812,594 issued and outstanding at December 31, 1997 - 1,812,594 $ 9,063 $ 9,063 Capital surplus 1,948 1,948 Retained earnings 11,312 10,873 Unrealized gain (loss) on securities available for sale, net (49) (199) ------------ ------------ Total shareholders' equity $ 22,274 $ 21,685 Total liabilities and shareholders' equity $ 185,908 $ 184,860 ============ ============
3 Independent Community Bankshares, Inc. Consolidated Statements of Income (000's omitted)
Unaudited -------------------------- For the Three Months Ended March 31 1998 1997 ----------- ---------- Interest Income Interest and fees on loans $ 2,422 $ 2,138 Interest on investment securities Taxable 27 36 Exempt from federal income taxes 163 161 Interest on securities available for sale Taxable 484 498 Exempt from federal income taxes 156 - Dividends 46 68 Interest on federal funds sold 17 57 ---------- ---------- Total interest income $ 3,315 $ 2,958 Interest expense Interest on deposits $ 1,244 $ 1,153 Interest on FHLB advances 38 50 Interest on short-term borrowings 5 24 ---------- ---------- Total interest expense $ 1,287 $ 1,227 Net interest income $ 2,028 $ 1,731 Provision for loan losses 45 55 ---------- ---------- Net interest income after provision for loan losses $ 1,983 $ 1,676 Other Income Commissions and fees from fiduciary Activities $ 220 $ 23 Service charges on deposit accounts 214 205 Net gains (losses) on securities available for sale (12) 3 Other operating income 38 - ---------- ---------- Total other income $ 460 $ 231 Other Expense Advertising $ 32 $ 29 Salaries and employee benefits 871 643 Net occupancy expense of premises 164 132 Other operating expenses 428 273 ---------- ---------- Total other expense $ 1,495 $ 1,077 Income before income taxes $ 948 $ 830 Income taxes 236 223 ---------- ---------- Net income $ 712 $ 607 ========== ========== Earnings per average share: (1998 - 1,812,594 shares, 1997 - 1,709,436 shares) Net income per share $ 0.39 $ 0.35 Dividends per share $ 0.15 $ -
4 Independent Community Bankshares, Inc. Consolidated Statement of Changes in Shareholders' Equity For the Three Months Ended March 31, 1998 and 1997 (000 omitted) (unaudited)
Accumulated Other Common Capital Comprehensive Retained Comprehensive Stock Surplus Income Earnings Income Total --------- --------- ------------- ---------- ------------- ---------- Balances - December 31, 1996 $ 4,299 $ 1,411 $ (519) $ 12,817 $ - $ 18,008 Comprehensive Income Net income 607 607 607 Other comprehensive income, net of tax Unrealized loss on available for sale securities (134) Less: Reclassification adjustment for gains realized in net income 2 --------- Other comprehensive income, net of tax (132) (132) (132) --------- Total comprehensive income $ 475 ========= Cash dividends Acquisition of common stock (114) (522) - (636) --------- --------- ---------- --------- ---------- Balances - March 31, 1997 $ 4,185 $ 889 $ (651) $ 13,424 $ 17,847 ========= ========= ========== ========= ========== Balances- December 31, 1997 $ 9,063 $ 1,948 $ (199) $ 10,873 $ - $ 21,685 Comprehensive Income Net income 712 712 $ 712 Other comprehensive income, net of tax Unrealized loss on available for sale securities 150 Less: Reclassification adjustment for gains realized in net income - --------- Other comprehensive income, net of tax 150 150 150 --------- Total comprehensive income $ 862 ========= Cash dividends (273) (273) --------- --------- ---------- --------- ---------- Balances - March 31, 1998 $ 9,063 $ 1,948 $ (49) $ 11,312 $ 22,274 ========= ========= ========== ========= ==========
5 Independent Community Bankshares, Inc. Consolidated Statement of Cash Flows (000 omitted) (unaudited)
For The Three Months Ended ------------------------------ March 31, March 31, 1998 1997 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 712 $ 607 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 45 56 Depreciation and amortization 134 103 Net (gains) losses on securities available for sale - (3) Discount accretion and premium amortization on securities, net 39 47 Deferred taxes - - (Increase) decrease in accrued interest receivable (64) 15 (Increase) decrease in prepaid income taxes 99 (2) (Increase) decrease in other assets (95) (95) Increase (decrease) in accrued interest payable (10) (4) Increase (decrease) in other liabilities (102) (3) ------------- ------------ Net cash provided by operating activities $ 758 $ 721 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity, principal paydowns and calls of investment securities $ 249 $ 954 Proceeds from maturity, principal paydowns and calls of securities available for sale 1,553 932 Proceeds from sale of securities available for sale 354 1,077 Purchase of investment securities - (207) Purchase of securities available for sale (1,068) (2,656) Net (increase) in loans (3,800) 29 Purchases of bank premises and equipment (156) (580) ------------- ------------ Net cash (used in) investing activities $ (2,868) $ (451) CASH FLOWS FROM FINANCING ACTIVTIES Net increase in demand deposits, NOW accounts, and savings accounts $ 133 $ 640 Net increase in certificates of deposits 319 2,599 Dividends paid (273) - Acquisition of common stock - (636) Payment on Federal Home Loan Bank advances - (1,000) New borrowings on Federal Home Loan Bank line of credit 1,200 Increase (decrease) in securities sold under agreement to repurchase (1,236) 672 ------------- ------------ Net cash provided by financing activities $ 143 $ 2,275 Increase in cash and cash equivalents $ (1,967) $ 2,545 CASH AND CASH EQUIVALENTS Beginning $ 8,609 $ 9,919 ============= ============ Ending $ 6,642 $ 12,464 ============= ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors 1,225 1,145 Income taxes 135 - 6 SUPPLEMENTAL DISCLOSURES FOR NON-CASH INVESTING AND FINANCING ACTIVITIES Unrealized gain (loss) on securities available for sale (74) (200) See Accompanying Note to Consolidated Financial Statements
7 INDEPENDENT COMMUNITY BANKSHARES, INC. Notes to Consolidated Financial Statements (Unaudited) For the Three Months Ended March 31, 1998 and 1997 Note 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1998, and the results of operations and changes in cash flows for the three months ended March 31, 1998 and 1997. The statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company's Annual Report for the year ended December 31, 1997. The results of operations for the three month periods ended March 31, 1998 and 1997, are not necessarily indicative of the results to be expected for the full year. Note 2. Securities Securities being held to maturity as of March 31, 1998 are summarized as follows:
------------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Market Cost Gains (Losses) Value ------------------------------------------------------ (000's omitted) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 2,005 $ - $ (10) $ 1,995 Obligations of states and political subdivisions 13,644 279 - 13,923 Mortgaged backed securities 373 3 - 376 ============ =========== =========== =========== $ 16,022 $ 282 $ (10) $ 16,294 ============ =========== =========== ===========
8 Securities available for sale as of March 31, 1998 are summarized below:
------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Market Cost Gains (Losses) Value ------------------------------------------------------- (000's omitted) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 2,141 $ 9 $ - $ 2,150 Corporate securities 2,840 7 - 2,847 Obligations of states and political subdivisions 12,082 111 - 12,193 Mortgaged backed securities 28,925 29 (230) 28,724 Other 770 - - 770 ------------ ----------- ----------- ------------ $ 46,758 $ 156 $ (230) $ 46,684 ============ =========== =========== ============
Note 3. The consolidated loan portfolio is composed of the following:
----------------------------- March 31, December 31, 1998 1997 ----------------------------- (000's omitted) Commercial, financial and agricultural $ 14,610 $ 15,111 Real estate construction 4,753 3,798 Real estate mortgage 80,724 76,590 Installment loans to individuals 7,947 8,738 ------------- ------------- Total loans 108,034 104,237 Less: Unearned income (5) (10) Allowance for loan losses (1,019) (974) ------------- -------------- Loans, net $ 107,010 $ 103,253 ============= ============== ICBI had $238,000 in non-performing assets at March 31, 1998.
9 Note 4. The following is a summary of transactions in the reserve for loan losses:
--------------------------------- March 31, December 31, 1998 1997 --------------------------------- (000's omitted) Balance at January 1 $ 974 $ 884 Provision charged to operating expense 45 178 Recoveries added to the reserve 12 40 Loan losses charged to the reserve (12) (128) --------------- --------------- Balance at the end of the period $ 1,019 $ 974 =============== ===============
The Company had no impaired loans at March 31, 1998 and December 31, 1997. Nonaccrual loans excluded from impaired loan disclosure under FASB 114 amounted to $238,000 at March 31, 1998 and $243,000 at December 31, 1997. If interest on these loans had been accrued, such income would have approximated $ 19,000 for the first three months of 1998 and $2,000 in 1997. Note 5. New Accounting Pronouncements FASB Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", was issued in June 1996 and establishes, among other things, new criteria for determining whether a transfer of financial assets in exchange for cash or other consideration should be accounted for as a sale or as a pledge of collateral in a secured borrowing. Statement 125 also establishes new accounting requirements for pledged collateral. As issued, Statement 125 is effective for all transfers and servicing of financial assets and extinguishments of liabilities occurring after December 1996. FASB Statement No. 127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125", defers for one year the effective date (a) of paragraph 15 of Statement 125 and (b) for repurchase agreement, dollar-roll, securities lending, or similar transactions, of paragraph 9-12 and 237(b) of Statement 125. FASB Statement No. 128, "Earnings per Share", was issued in February 1997 and establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. This Statement simplifies the standards for computing earnings per share previously found in APB Opinion No. 15, "Earnings Per Share", and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. This Statement is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. FASB Statement No. 129, "Disclosure of Information About Capital Structure", was issued in February 1997 and establishes standards for disclosing information about an entity's capital structure. It applies to all entities. This Statement continues the previous requirements to disclose certain information about an entity's capital structure found in APB Opinion No. 10, "Omnibus Opinion - 1966, and No. 15, Earnings per Share", and FASB Statement No. 47, "Disclosure of Long-Term Obligations", for entities that were subject to the requirements of those standards. This Statement is effective for financial statements for periods ending after December 15, 1997. 10 FASB Statement No. 130, "Reporting Comprehensive Income", was issued in June 1997 and establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. This Statement requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. This Statement requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. This Statement is effective for fiscal years beginning after December 15, 1997. The effects of these Statements on the Company's financial statements are not expected to be material. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Summary Net income for the three months ended March 31, 1998, increased 17.3% to $712,000 or .39 per share compared to $607,000 or .35 per share for the first three months of 1997. Annualized returns on average assets and equity for the period ended March 3, 1998, were 1.54% and 13.66%, respectively, compared to 1.49% and 13.71% for the same period in 1997. The total assets of the Company increased to $185,908,000 at March 31, 1998, compared to $184,860,000 at December 31, 1997, representing an increase of $1,048,000 or .6%. Loan demand has increased the balance to $107,010,000 at March 31, 1998, up from $103,253,000 at December 31, 1997. The investment portfolio has decreased 2.5% to $62,795,000 at March 31, 1998 compared to $64,422,000 at December 31, 1997. Shareholders' equity at March 31, 1998, totaled $22,274,000, compared to $21,685,000 at December 31, 1997. Book value per share of common stock on March 31, 1998 was $12.29 per share compared to $12.02 at December 31, 1997. Net Interest Income Net interest income is the Company's primary source of earnings and represents the difference between interest and fees earned on earning assets and the interest expense paid on deposits and other interest bearing liabilities. Net interest income totaled $2,028,000 for the first three months of 1998 compared to $1,731,000 for the same period in 1997. The improvement in net interest income was attributable to a higher volume of earning assets as well as management's conscientious effort to improve the margin through asset/liability management. 11 Noninterest Income Service charges on deposit accounts for the first three months of 1998 totaled $214,000 compared $205,000 for the same period in 1997, an increase of 4.4%. Commission and fees from fiduciary activities was $220,000 at March 31, 1998 compared to $23,000 at March 31, 1997. The acquisition of The Tredegar Trust Company on August 1, 1997 has solely contributed to this increase. Otherwise the Company currently derives most of its other noninterest income from fees on deposit related products and sales of non deposit investment products. Noninterest Expense In support of the Company's continued growth, total noninterest expenses consisting of employee related costs, occupancy and other overhead totaled $1,495,000 for the first three months of 1998, compared to $1,077,000 for the same period in 1997, representing an increase of $418,000 or 38.8%. A portion of the increase in expenses is attributable to the same types of overhead cost of the operation of The Tredegar Trust Company. Allowance for Loan Losses The allowance for loan losses at March 31, 1998 was $1,019,000. This is a $45,000 increase from December 31, 1997. The current ratio of the allowance for loan losses to gross loans is .94%. Management believes the allowance for loan losses is adequate to cover credit losses inherent in the loan portfolio at March 31, 1998. Loans classified as loss, doubtful, substandard or special mention are adequately reserved for and are not expected to have a material impact beyond what has been reserved. Capital Resources Shareholders' equity at March 31, 1998 was $22,274,000 compared to $21,685,000 on December 31, 1997. The retention of net income as well as the decrease in allowance for unrealized loss on securities available for sale have been contributing factors to growth in shareholders' equity. During the first quarter of 1997, the Company did purchase and retire 22,689 shares at a cost of $635,292. At March 31, 1998, the Company's tier 1 and total risk-based capital ratios were 18.9% and 19.9%, respectively, compared to 18.8% and 19.7% at December 31, 1997. The Company's leverage ratio was 11.4% at March 31, 1998, compared to a ratio of 11.8% at December 31, 1997. The Company's capital structure places it above the regulatory guidelines, as the Company maintains a strong capital base to take advantage of business opportunities while ensuring that it has the resources to protect against the risks inherent in its business. Year 2000 There have not been any material changes in the disclosures provided in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997 with respect to Year 2000. The Company's Year 2000 Committee continues to meet on a regular basis to address and evaluate the potential problems that may be encountered within all of the Company's subsidiaries with respect to Year 2000 issues. 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule (filed electronically only) (b) Reports on Form 8-K -- none. 13 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. INDEPENDENT COMMUNITY BANKSHARES, INC. (Registrant) Date: May 15, 1998 /s/ Joseph L. Boling ------------------- -------------------------------------- Joseph L. Boling, Chairman of the Board & CEO Date: May 15, 1998 /s/ Alice P. Frazier ------------------- -------------------------------------- Alice P. Frazier, Senior Vice President & CFO EX-27 2 FDS --
9 1000 3-MOS DEC-31-1998 MAR-31-1998 6642 931 0 0 46758 16022 16294 108029 1019 185908 157000 5812 822 0 0 0 9063 13211 185908 2422 893 0 3315 1244 1287 2028 45 (12) 1495 948 948 0 0 712 .39 .39 5.17 238 0 0 2400 1019 12 12 1019 641 0 378
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