-----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, Bn7X6iRZy05BBYiUgnLsA5d8MGH2JleMd/FWOZt2MoDLwfmHhb3xhxI95rTMJRgt y2Dsv5lpTITtXOW3GgOsXg== 0001002105-00-000070.txt : 20000516 0001002105-00-000070.hdr.sgml : 20000516 ACCESSION NUMBER: 0001002105-00-000070 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 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: 635322 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, 2000 [ ] 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 20117 (Address of Principle Executive Offices) (703) 777-6327 (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: 1,721,209 shares of common stock, par value $5.00 per share, outstanding as of May 11, 2000 o 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 7 Item 2. Management's Discussion and Analysis of Results of Operation and Financial Condition 10 Part II. Other Information Item 1. Legal Proceedings 12 Item 2. Change in Securities 12 Item 3. Defaults upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13
2 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS INDEPENDENT COMMUNITY BANKSHARES, INC. Consolidated Balance Sheets (In Thousands)
(Unaudited) March 30 December 31, 2000 1999 ---------------- ---------------- Assets: Cash and due from banks $ 5,418 $ 8,037 Interest-bearing balances in banks 87 87 Temporary investments: Federal funds sold 4,090 12,139 Other money market investments 365 293 Securities (fair value: March 31, 2000, $ 81,690, December 31, 1999, $ 67,745) 81,687 67,739 Loans held for sale 1,359 1,232 Loans, net 146,094 141,782 Bank premises and equipment, net 6,236 6,285 Other assets 7,634 6,331 ---------------- ---------------- Total assets $ 252,970 $ 243,925 ================ ================ Liabilities and Shareholders' Equity Liabilities: Deposits: Non-interest bearing $ 45,941 $ 44,900 Savings and interest-bearing demand deposits 101,959 97,208 Time deposits 56,878 61,729 ---------------- ---------------- Total deposits $ 204,778 $ 203,837 Federal funds purchased $ - $ - Securities sold under agreements to Repurchase 10,739 10,811 Federal Home Loan Bank advances 12,000 5,000 Other liabilities 2,889 1,202 ---------------- ---------------- Total liabilities $ 230,406 $ 220,850 Shareholders' Equity Common stock par value $5.00 per share, authorized 10,000,000 shares; issued and outstanding at March 31, 2000 - 1,721,209 issued and outstanding at December 31, 1999 - 1,778,994 $ 8,606 $ 8,895 Capital surplus 255 1,293 Retained earnings 15,567 14,852 Unrealized gain (loss) on securities available for sale, net (1,864) (1,965) ---------------- ---------------- Total shareholders' equity $ 22,564 $ 23,075 Total liabilities and shareholders' equity $ 252,970 $ 243,925 ================ ================
See Accompanying Notes to Consolidated Financial Statements. 3 INDEPENDENT COMMUNITY BANKSHARES, INC. Consolidated Statements of Income (In Thousands, Except Per Share)
Unaudited ----------------------------------------- For the Three Months Ended March 31, 2000 1999 ----------------- ----------------- Interest Income Interest and fees on loans $ 3,148 $ 2,672 Interest on investment securities Taxable 6 8 Exempt from federal income taxes 93 145 Interest on securities available for sale Taxable 488 352 Exempt from federal income taxes 367 216 Dividends 73 42 Interest on federal funds sold and other 151 76 ----------------- ----------------- Total interest income $ 4,326 $ 3,511 Interest expense Interest on deposits $ 1,234 $ 1,181 Interest on FHLB advances 70 71 Interest on short-term borrowings 130 32 ----------------- ----------------- Total interest expense $ 1,434 $ 1,284 Net interest income $ 2,892 $ 2,227 Provision for loan losses 75 81 ----------------- ----------------- Net interest income after provision for loan losses $ 2,817 $ 2,146 Other Income Commissions and fees from fiduciary activities $ 366 $ 248 Service charges on deposit accounts 321 246 Net gains (losses) on securities available for sale - (8) Other operating income 167 177 ----------------- ----------------- Total other income $ 854 $ 663 Other Expense Advertising $ 73 $ 82 Salaries and employee benefits 1,314 1,072 Net occupancy expense of premises 285 203 Other operating expenses 530 535 ----------------- ----------------- Total other expense $ 2,202 $ 1,892 ----------------- ----------------- Income before income taxes $ 1,469 $ 917 Income taxes 381 195 ----------------- ----------------- Net income $ 1,088 $ 722 ================= ================= Earnings per weighted average share: (2000 - 1,777,972, 1999 - 1,778,994) Net income per share $ 0.61 $ 0.41 Dividends per share $ 0.21 $ 0.17
See Accompanying Notes to Consolidated Financial Statements. 4 INDEPENDENT COMMUNITY BANKSHARES, INC. Consolidated Statement of Changes in Shareholders' Equity For the Three Months Ended March 31, 2000 and 1999 (In Thousands) (Unaudited)
Accumulated Other Common Capital Comprehensive Retained Comprehensive Stock Surplus Income Earnings Income Total Balances - December 31, 1998 $ 8,895 $ 1,293 $ 179 $ 12,496 $ - $ 22,863 Comprehensive Income Net income 722 722 722 Other comprehensive income net of tax - Unrealized loss on available for sale securities (201) Less: Reclassification adjustment for gains realized in net income - Other comprehensive income, net of tax (201) (201) (201) Total comprehensive income $ 521 =========== Cash dividends (301) (301) ------------ ------------ ------------- ------------- ------------ Balances - March 31, 1999 $ 8,895 $ 1,293 $ (22) $ 12,917 $ 23,083 ============ ============ ============= ============= ============ Balances - December 31, 1999 $ 8,895 $ 1,293 $ (1,965) $ 14,852 $ - $ 23,075 Comprehensive Income Net income 1,088 1,088 1,088 Other comprehensive income net of tax Unrealized loss on available for sale securities 101 Less: Reclassification adjustment for gains realized in net income -- ------------ Other comprehensive income, net of tax 101 101 101 ------------ Total comprehensive income $ 1,189 ============ Cash dividends declared (373) (373) Purchase of common stock (57,785 shares) (289) (1,038) (1,327) ------------ ------------ ------------- -------------- ----------- Balances - March 31, 2000 $ 8,606 $ 255 $ (1,864) $ 15,567 $ 22,564 ============ ============ ============= ============== ===========
See Accompanying Notes to Consolidated Financial Statements. 5 INDEPENDENT COMMUNITY BANKSHARES, INC. Consolidated Statements of Cash Flows (In Thousands, Unaudited)
For the Three Months Ended ------------------------------------ March 31, March 31, 2000 1999 ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,088 $ 722 Adjustments to reconcile net income to net cash provided by operating activities Provision for loan losses 75 81 Depreciation and amortization 178 151 Net (gains) losses on securities available for sale - 7 Discount accretion and premium amortization on securities, net - 29 Net (gains) losses on sale of assets - (7) Net loss on sale of other real estate - 5 Originations of loans held for sale (7,794) (7,608) Proceeds from sales of loans held for sale 7,667 8,388 Decrease in prepaid income taxes 6 - (Increase) in other assets (1,371) (357) Increase in other liabilities 1,682 307 ----------------- ------------------ Net cash provided by operating activities $ 1,531 $ 1,718 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity, principal paydowns and calls on investment securities $ 14 $ - Proceeds from maturity, principal paydowns and calls of securities available for sale 838 1,528 Proceeds from sale of securities available for sale 490 1,735 Proceeds from sale of bank premises and equipment - 75 Purchase of securities available for sale (15,137) (6,453) Net (increase) in loans (4,387) (2,746) Proceeds from sale of other real estate - 195 Purchases of bank premises and equipment (114) (375) ----------------- ------------------ Net cash (used in) investing activities $ (18,296) $ (6,041) CASH FLOWS FROM FINANCING ACTIVTIES Net increase in demand deposits, NOW accounts, and savings accounts $ 5,792 $ 4,809 Net (decrease) increase in certificates of deposits (4,851) 403 Proceeds from Federal Home Loan Bank advances 9,000 - Payment on Federal Home Loan Bank advances (2,000) (1,000) Dividends declared (373) (301) Acquisition of common stock (1,327) - Increase (decrease) in securities sold under agreement to repurchase (72) 2,413 ----------------- ------------------ Net cash provided by financing activities $ 6,169 $ 6,324 Increase in cash and cash equivalents $ (10,596) $ 2,001 CASH AND CASH EQUIVALENTS Beginning $ 20,556 $ 12,813 ================= ================== Ending $ 9,960 $ 14,814 ================= ================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors 1,381 1,188 Income taxes 2 4 SUPPLEMENTAL DISCLOSURES FOR NON-CASH INVESTING AND FINANCING ACTIVITIES Unrealized gain (loss) on securities available for sale 153 (303)
See Accompanying Note to Consolidated Financial Statements. 6 INDEPENDENT COMMUNITY BANKSHARES, INC. Notes to Consolidated Financial Statements (Unaudited) For the Three Months Ended March 31, 2000 and 1999 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, 2000, and the results of operations and changes in cash flows for the three months ended March 31, 2000 and 1999. 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, 1999. The results of operations for the three month periods ended March 31, 2000 and 1999, 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, 2000 are summarized as follows:
---------------------------------------------------------------------- Gross Gross Amortized Unrealized Unrealized Market Cost Gains (Losses) Value ---------------------------------------------------------------------- (In Thousands) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 250 $ - $ (17) $ 233 Obligations of states and political subdivisions 7,432 33 (12) 7,453 Mortgaged backed securities 53 - (1) 52 --------------- --------------- ---------------- -------------- $ 7,735 $ 33 $ (30) $ 7,738 =============== =============== ================ ==============
7 Securities available for sale as of March 31, 2000 are summarized below:
------------------------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Market Cost Gains (Losses) Value ------------------------------------------------------------------ (In Thousands) U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 5,818 $ 2 $ (145) $ 5,675 Corporate securities 2,989 2 (368) 2,623 Obligations of states and political subdivisions 25,170 14 (1,254) 23,930 Mortgaged backed securities 36,478 5 (1,033) 35,450 Other 6,322 4 (52) 6,274 --------------- ------------- --------------- ------------ $ 76,777 $ 27 $ (2,852) $ 73,952 =============== ============= =============== ============
Note 3. The consolidated loan portfolio is composed of the following:
---------------------------------------- March 31, December 31, 2000 1999 ------------------ -------------------- (In Thousands) Commercial, financial and agricultural $ 19,544 $ 19,055 Real estate construction 11,330 12,151 Real estate mortgage 107,018 102,184 Installment loans to individuals 9,694 9,845 ------------------ ------------------- Total loans 147,586 143,235 Less: Unearned income - - Allowance for loan losses (1,492) (1,453) ------------------ ------------------- Loans, net $ 146,094 $ 141,782 ================== ===================
ICBI had $391,940 in non-performing assets at March 31, 2000. Note 4. The following is a summary of transactions in the reserve for loan losses: ------------------------------ March 31, December 31, 2000 1999 ------------------------------ (In Thousands) Balance at January 1 $ 1,453 $ 1,064 Provision charged to operating expense 75 420 Recoveries added to the reserve 28 120 Loan losses charged to the reserve (64) (151) ------------- -------------- Balance at the end of the period $ 1,492 $ 1,453 ============= ============== 8 Note 5. Earnings Per Share The following table shows the weighted average number of shares used in computing earnings per share and the effect on the weighted average number of shares of diluted potential common stock. Potential dilutive common stock has no effect on income available to common shareholders. Earnings per share amounts for prior periods have been restated to give effect to the application of Statement 128 that was adopted by the Company in 1997.
March 31, 2000 March 31, 1999 Per share Per share Shares Amount Shares Amount ------------ ------------- ------------ ------------- Basic EPS 1,777,972 $ 0.61 1,778,994 $ 0.41 ============= ============= Effect of dilutive securities: stock options(1) 15,048 13,825 ------------ ------------ Diluted EPS 1,793,020 $ 0.61 1,792,819 $ 0.41 ============ ============= ============ =============
(1) The anit-dilutive effects of 31,000 options were not included in the calculation. 9 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, 2000 increased 50.7% to $1.1 million or $.61 per diluted share compared to $722 thousand or $.41 per diluted share for the first three months of 1999. Annualized returns on average assets and equity for the period ended March 31, 2000 were 1.81% and 18.98%, respectively, compared to 1.40% and 12.75% for the same period in 1999. The total assets of the Independent Community Bankshares, Inc. ("ICBI") increased to $253.0 million at March 31, 2000 compared to $243.9 million at December 31, 1999 representing an increase of $9.1 million or 3.7%. Net loans at March 31, 2000, were $146.1 million, an increase of $4.3 million from the December 31, 1999 balance of $141.8 million. Continued loan demand fueled the loan growth experienced for the first three months of 2000. The investment portfolio increased 20.6% to $81.7 million at March 31, 2000 compared to the $67.7 million balance at December 31, 1999. Federal funds sold decreased $8.0 million to $4.1 million at March 31, 2000 compared to $12.1 million at December 31, 1999. Deposits increased to $204.8 million at March 31, 2000, from the $203.8 million balance at December 31, 1999. Shareholders' equity at March 31, 2000 totaled $22.6 million compared to $23.1 million at December 31, 1999. The book value per common share on March 31, 2000 was $13.11 per share compared to $12.97 at December 31, 1999. Net Interest Income Net interest income is ICBI'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 $2.9 million for the first three months of 2000 compared to $2.2 million for the same period in 1999. Net interest income has been positively affected by a 17.2% increase in average earning assets from March 31, 1999 to March 31, 2000. Noninterest Income Service charges on deposit accounts for the first three months of 2000 totaled $321,000 compared to $246,000 for the same period in 1999, a increase of 30.5%. Commission and fees from fiduciary activities were $366,000 at March 31, 2000 compared to $248,000 at March 31, 1999. Other Operating Income decreased to $167,000 at March 31, 2000 from the $177,000 at March 31, 1999. Non-deposit investment sales commissions and loan fees from the mortgage banking department within The Middleburg Bank, ICBI's banking subsidiary, account for a majority of other operating income. Noninterest Expense Enhancing ICBI's continued growth, total noninterest expense consisting of employee related costs, occupancy and other overhead totaled $2.2 million for the first three months of 2000 compared to $1.9 million for the same period of 1999. This represents a 16.4% increase or $310,000. Branch expansion and mortgage banking has increased salary and benefit expense by 22.6% from $1.1 million in the first quarter of 1999 to $1.3 million for the same period in 2000. 10 Allowance for Loan Losses The allowance for loan losses at March 31, 2000 was $1.5 million. This is an increase of $39,000 from December 31, 1999. The ratio of the allowance for loan losses to gross loans is 1.01%. Management believes the allowance for loan losses is adequate to cover credit losses inherent in the loan portfolio at March 31, 2000. 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 Shareholder's equity at March 31, 2000 was $22.6 million compared to $23.1 million at December 31, 1999. During March 2000, ICBI repurchased 57,785 shares of common stock at an average price of $22.43. This reduced the number of shares outstanding to 1,721,209 at March 31, 2000. Common stock decreased by $289,000 to $8.6 million and capital surplus decreased by $1.0 million to $255,000. ICBI's board of directors has authorized a share repurchase program which allows management to repurchase up to 100,000 shares as deemed appropriate. At March 31, 2000 ICBI's tier 1 and total risked-based capital ratios were 13.16% and 114.00%, respectively, compared to 14.0% and 14.8% at December 31, 1999. ICBI's leverage ratio was 9.73% at March 31, 2000 compared to a ratio of 10.8% at December 31, 1999. ICBI's capital structure places it above applicable regulatory guidelines which affords ICBI the opportunity to take advantage of business opportunities while ensuring that it has resources to protect against the risks inherent in its business. Forward-looking Statement Certain information contained in this discussion may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are generally identified by phrases such as "the Company expects," "the Company believes" or words of similar import. Such forward-looking statements involve known and unknown risks including, but not limited to, changes in general economic and business conditions, interest rate fluctuations, competition within and from outside the banking industry, new products and services in the banking industry, risk inherent in making loans such as repayment risks and fluctuating collateral values, changing trends in customer profiles and changes in laws and regulations applicable to the Company. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. 11 Part II. OTHER INFORMATION Item 1. Legal proceedings. None Item 2. Change in Securities. None Item 3. Defaults upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None 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 12 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, 2000 /s/ Joseph L. Boling ------------ ----------------------------------- Joseph L. Boling, Chairman of the Board & CEO Date: May 15, 2000 /s/ Alice P. Frazier ------------ ----------------------------------- Alice P. Frazier, Senior Vice President & CFO EX-27 2 FDS -- INDEPENDENT COMMUNITY BANKSHARES, INC.
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-QSB FOR INDEPENDENT COMMUNITY BANKSHARES, INC. FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 MAR-31-2000 5,418 452 4,090 0 73,952 7,735 7,738 147,586 1,492 252,970 204,778 22,739 2,889 0 0 0 8,606 13,958 252,970 3,148 1,027 151 4,326 1,234 1,434 2,892 75 0 2,202 1,469 0 0 0 1,088 0.61 0.61 5.24 392 0 0 392 1,453 64 28 1,492 548 0 944
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