-----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, HcelQBJ/CqP1J+tYTTIBW3nN34cRvOrOdY9mHqdI0Pvkpv9VXlQRMJfbz0M2RXkh 3EriUkQ7rN3AZ/Gu4SP/fQ== 0001002105-97-000104.txt : 19970815 0001002105-97-000104.hdr.sgml : 19970815 ACCESSION NUMBER: 0001002105-97-000104 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NONE 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: 1934 Act SEC FILE NUMBER: 033-70920 FILM NUMBER: 97663813 BUSINESS ADDRESS: STREET 1: 111 WEST WASHINGTON STREET 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 INDEPENDENT COMMUNITY BANKSHARES 10-QSB 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 June 30, 1997 [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to _____________ Commission file number: 333-24523 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: 837,149 shares of common stock, par value $5.00 per share, outstanding as of June 30, 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 12 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 Form 8-K Signature 13 -2- Independent Community Bankshares, Inc. Consolidated Balance Sheets (000 omitted)
(Unaudited) June 30, December 31, 1997 1996 Cash and due from banks $ 7,561 $ 6,519 Securities (fair value: June 30, 1997, $ 65,120, December 31, 1996, $ 52,376 ) 65,100 52,402 Federal funds sold - 3,400 Loans, net 95,972 93,711 Bank premises and equipment, net 5,522 4,699 Other assets 2,332 2,235 ------------------------ ----------------------- Total assets $ 176,487 $ 162,966 ======================== ======================= Liabilities and Shareholders' Equity Liabilities: Deposits: Non-interest bearing $ 24,674 $ 23,242 Interest bearing 127,024 115,548 ------------------------ ----------------------- Total deposits $ 151,698 $ 138,790 Securities sold under agreements to repurchase $ 2,759 $ 1,445 Federal Home Loan Bank advances 3,000 4,000 Other liabilities 567 723 ------------------------ ----------------------- Total liabilities $ 158,024 $ 144,958 Shareholders' Equity Common stock par value $5.00 per share, authorized 10,000,000 shares; issued and outstanding at June 30, 1997 - 837,149 issued and outstanding at December 31, 1996 - 859,838 $ 4,185 $ 4,299 Capital surplus 889 1,411 Retained earnings 13,832 12,817 Unrealized gain (loss) on securities available for sale, net (443) (519) ------------------------ ----------------------- Total shareholders' equity $ 18,463 $ 18,008 Total liabilities and shareholders' equity $ 176,487 $ 162,966 ======================== =======================
See Accompanying Notes to Consolidated Financial Statements -3- Independent Community Bankshares, Inc. Consolidated Statements of Income (000 omitted)
Unaudited Unaudited --------------------------------------------------------------- For the Six Months For the Quarter Ended June 30, Ended June 30, 1997 1996 1997 1996 Interest and fees on loans $ 4,333 $ 3,817 $ 2,195 $ 1,960 Interest on investment securities Taxable 67 94 31 43 Exempt from federal income taxes 335 279 174 143 Interest on securities available for sale Taxable 1,090 872 592 444 Dividends 140 132 71 77 Interest on federal funds sold 97 86 40 50 ---------------- --------------- -------------- --------------- Total interest income $ 6,062 $ 5,280 $ 3,103 $ 2,717 Interest expense Interest on deposits $ 2,374 $ 2,209 $ 1,221 $ 1,118 Interest on FHLB advances 95 75 45 30 Interest on short-term borrowings 55 - 31 - ---------------- --------------- -------------- --------------- Total interest expense $ 2,524 $ 2,284 $ 1,297 $ 1,148 Net interest income $ 3,538 $ 2,996 $ 1,806 $ 1,569 Provision for loan losses 116 - 61 - ---------------- --------------- -------------- --------------- Net interest income after provision for loan losses $ 3,422 $ 2,996 $ 1,745 $ 1,569 Other Income Commissions and fees from fiduciary activities $ 42 $ 9 $ 19 $ 5 Service charges on deposit accounts 482 375 277 200 Net gains (losses) on securities available for sale (7) 14 (10) - Other operating income - 5 - 5 ---------------- --------------- -------------- --------------- Other Expense Advertising $ 84 $ 85 $ 55 $ 31 Salaries and employee benefits 1,263 1,182 620 572 Net occupancy expense of premises 270 272 138 154 Other operating expenses 687 604 414 335 ---------------- --------------- -------------- --------------- Total other expense $ 2,304 $ 2,143 $ 1,227 $ 1,092 Income before income taxes $ 1,635 $ 1,256 $ 804 $ 687 Income taxes 446 341 223 201 Net income $ 1,189 $ 915 $ 581 $ 486 ================ =============== ============== =============== Earnings per average share: (1997 - 847,014 shares 1996 - 859,838 shares) Net income per share $ 1.40 $ 1.06 $ 0.69 $ 0.56 Dividends per share $ 0.21 $ 0.40 $ 0.21 $ 0.22
See Accompanying Notes to Consolidated Financial Statements -4- Independent Community Bankshares, Inc. Consolidated Statement of Changes in Shareholders' Equity For the Six Months Ended June 30, 1997 and 1996 (000 omitted) (unaudited)
Unrealized Gain (Loss) on Securities Common Capital Retained Available for Stock Surplus Earnings Sale, Net Total January 1, 1996 $ 4,299 $ 1,411 $ 11,508 $ (265) $ 16,953 Net income 915 915 Cash dividends (334) (334) Change in net unrealized (losses) on securities available for sale (610) (610) ------------ ------------- ------------ --------------- ------------- Balances: June 30, 1996 $ 4,299 $ 1,411 $ 12,089 $ (875) $ 16,924 ============ ============= ============ =============== ============= Balances: January 1, 1997 $ 4,299 $ 1,411 $ 12,817 $ (519) $ 18,008 Net income 1,189 1,189 Cash dividends (174) (174) Acquisition of common stock (114) (522) (636) Change in net unrealized (losses) on securities available for sale 76 76 ------------ ------------- ------------ --------------- ------------- Balances: June 30, 1997 $ 4,185 $ 889 $ 13,832 $ (443) $ 18,463 ============ ============= ============ =============== =============
See Accompanying Notes to Consolidated Financial Statements -5- Independent Community Bankshares, Inc. Consolidated Statement of Cash Flows (000 omitted) (unaudited)
For the Six Months Ended -------------------------------- June 30, June 30, 1997 1996 ------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,189 $ 915 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 116 - Depreciation and amortization 187 139 Net (gains) losses on securities available for sale 7 (14) Discount accretion and premium amortization on securities, net 97 90 Net (gains) losses on sale of assets 15 - Deferred taxes - 25 (Increase) decrease in accrued interest receivable (74) 1 Decrease in prepaid income taxes 78 - (Increase) in other assets (175) (27) Increase in accrued interest payable 64 11 Increase in other liabilities (220) (120) ------------- --------------- Net cash provided by operating activities $ 1,284 $ 1,020 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity, principal paydowns and calls of investment securities $ 698 $ 1,563 Proceeds from maturity, principal paydowns and calls of securities available for sale 2,279 1,244 Proceeds from sale of securities available for sale 2,075 10,219 Proceeds from sale of assets 37 - Purchase of investment securities (1,889) (1,967) Purchase of securities available for sale (15,815) (12,284) Net (increase) in loans (2,377) (6,724) Purchases of bank premises and equipment (1,062) (627) ------------- --------------- Net cash (used in) investing activities $(16,054) $ (8,576) CASH FLOWS FROM FINANCING ACTIVTIES Net increase in demand deposits, NOW accounts, and savings accounts $ 4,421 $ 3,660 Net increase in certificates of deposits 8,487 2,997 Dividends paid (174) (334) Acquisition of common stock (636) - Payment on Federal Home Loan Bank advances (1,000) (1,000) Increase in securities sold under agreement to repurchase 1,314 - ------------- --------------- Net cash provided by financing activities $ 12,412 $ 5,323 Decrease in cash and cash equivalents $ (2,358) $ (2,233) CASH AND CASH EQUIVALENTS Beginning $ 9,919 $ 8,386 ============= =============== Ending $ 7,561 $ 6,153 ============= =============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors 2,460 2,273 Income taxes 414 434 SUPPLEMENTAL DISCLOSURES FOR NON-CASH INVESTING AND FINANCING ACTIVITIES Unrealized gain (loss) on securities available for sale (672) (1,330)
See Accompanying Note to Consolidated Financial Statements -6- INDEPENDENT COMMUNITY BANKSHARES, INC. Notes to Consolidated Financial Statements (Unaudited) For the Six Months Ended June 30, 1997 and 1996 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 June 30, 1997, and the results of operations and changes in cash flows for the six months ended June 30, 1997 and 1996. 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, 1996. The results of operations for the six month periods ended June 30, 1997 and 1996, are not necessarily indicative of the results to be expected for the full year. Note 2. Securities Securities being held to maturity as of June 30, 1997 are summarized as follows: (000 omitted)
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value ------------------- ---------------- --------------- -------------- U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 3,265 $ 9 $ (48) $ 3,226 Obligations of states and political subdivisions 14,626 116 (57) 14,685 ------------------- ---------------- --------------- -------------- $ 17,891 $ 125 $ (105) $ 17,911 =================== ================ =============== ==============
Securities available for sale as of June 30, 1997 are summarized below: (000 omitted)
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value ------------------- ---------------- ---------------- --------------- U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 5,411 $ 4 $ (87) $ 5,328 Corporate securities 3,039 14 (83) 2,970 Mortgaged backed securities 38,723 54 (574) 38,203 Other 708 - - 708 ------------------- ---------------- ---------------- --------------- $ 47,881 $ 72 $ (744) $ 47,209 =================== ================ ================ ===============
-7- Note 3. The consolidated loan portfolio is composed of the following:
June 30, December 31, 1997 1996 ----------------- --------------- (000 omitted) Commercial, financial and agricultural $ 13,698 $ 11,648 Real estate construction 4,498 4,182 Real estate mortgage 70,881 70,739 Installment loans to individuals 7,882 8,061 ----------------- --------------- Total loans 96,959 94,630 Less: Unearned income (22) (35) Allowance for loan losses (965) (884) ----------------- --------------- Loans, net $ 95,972 $ 93,711 ================= ===============
Note 4. The following is a summary of transactions in the reserve for loan losses:
June 30, December 31, 1997 1996 ------------------ ---------------- (000 omitted) Balance at January 1 $ 884 $ 866 Provision charged to operating expense 116 65 Recoveries added to the reserve 26 78 Loan losses charged to the reserve (61) (125) ------------------ ---------------- Balance at the end of the period $ 965 $ 884 ================== ================
The Company had no impaired loans at June 30, 1997 and December 31, 1996. Nonaccrual loans excluded from impaired loan disclosure under FASB 114 amounted to $43,531 at June 30, 1997 and $ 76,227 at December 31, 1996. If interest on these loans had been accrued, such income would have approximated $379 for the first half of 1997 and $1,993 in 1996. 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. -8- 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. 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. -9- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Summary Net income for the six months ended June 30, 1997, increased 29.9% to $1,189,000 or $1.40 per share compared to $915,000 or $1.06 for the first six months of 1996. Annualized returns on average assets and average equity for the period ended June 30, 1997, were 1.42% and 13.12% , respectively, compared to 1.27% and 10.73% for the same period in 1996. The total assets of the Bank increased to $176,487,000 at June 30, 1997, compared to $162,966,000 at December 31, 1996, representing an increase of $13,521,000 or 8.3%. Loan demand improved slightly to $95,972,000 at June 30, 1997, from 93,711,000 at December 31, 1996. The largest percentage increase in assets was in investments which includes $10 million in new purchases related to a CD promotion held late in the second quarter. Shareholders' equity at June 30, 1997, totaled $18,463,000 compared to $18,008,000 at December 31, 1996. Book value per share of common stock on June 30, 1997, was $22.05 per share compared to $20.94 at December 31, 1996. Net Interest Income Net interest income is the Bank's primary source of earnings and represents the difference between interest and fees earned on earnings assets and the interest expense paid on deposits and other interest bearing liabilities. Net interest income totaled $3,538,000 for the first six months of 1997 compared to $2,996,000 for the same period in 1996. The improvement in net interest income was attributable to a higher volume of earning assets and an improving net interest margin. Noninterest Income Service charges on deposit accounts for the six months of 1997 totaled $482,000 compared to $375,000 for the same period in 1996, an increase of 28.5%. The Bank currently derives most of its other noninterest income from fees on deposit related products. Noninterest Expenses In support of the Bank's continued growth, total noninterest expenses consisting of employee related costs, occupancy and other overhead totaled $2,304,000 for the first six months of 1997, compared to $2,143,000 for the same period in 1996, representing an increase of $161,000 or 7.5%. The increase in expense is attributable to the increase in salary and occupancy expense associated with a new branch building in Leesburg. Allowance for Loan Losses The allowance for loan losses as of June 30, 1997 was $965,000. This is a $81,000 increase from December 31, 1996. The current ratio of the allowance for loan losses to gross loans is 1.0%. The provision taken during the first six months of 1997 has been an attempt to keep the growth of the allowance in accordance with loan growth. Management believes that the allowance for loan losses is adequate to cover credit losses inherent in the loan portfolio at June 30, 1997. 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. -10- Capital Resources Shareholders' equity on June 30, 1997, was $18,463,000 compared to $18,008,000 on December 31, 1996. Factors contributing to the change in shareholders' equity were the retention of net income as well as the increase in the unrealized loss on securities available for sale. During the first quarter, the company did purchase and retire 22,689 shares at a cost of $635,292. At June 30, 1997, the Company's tier 1 and total risk-based capital ratios were 18.63% and 19.58%, respectively, compared to 19.3% and 20.2% at December 31, 1996. The Bank's leverage ratio was 11.63% at June 30, 1997, compared to a ratio of 11.7% at December 31, 1996. 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. -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. Independent Community Bankshares, Inc. Annual Meeting of Shareholders was held Wednesday, April 9, 1997 in Middleburg, Virginia. The election of the directors of the company was the only item voted upon. The votes cast for, against or withheld for the election were as follows: Name For Against Abstentions ---- --- ------- ----------- Howard M. Armfield 606,740 0 0 Joseph L. Boling 606,740 0 0 J. Lynn Cornwell, Jr. 606,740 0 0 William F.Curtis 606,740 0 0 Gordon Grayson 606,740 0 0 George A. Horkan, Jr. 606,740 0 0 C. Oliver Iselin, III 606,740 0 0 William S. Leach 606,740 0 0 John C. Palmer 606,740 0 0 Millicent W. West 606,740 0 0 Edward T. Wright 606,740 0 0 Item 5. Other Information. None Item 6. Exhibits and 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: August 14, 1997 /s/ Joseph L. Boling ------------------------------------ Joseph L. Boling, Chairman of the Board & CEO Date: August 14, 1997 /s/ Alice P. Frazier ------------------------------------ Alice P. Frazier, Senior Vice President & CFO -13- EX-27 2 FDS INDEPENDENT COMMUNITY BANKSHARES, INC.
9 1,000 6-MOS DEC-31-1997 JUN-30-1997 7,561 0 0 0 38,203 0 0 96,937 965 176,487 151,698 5,759 567 0 0 0 4,185 14,278 18,463 4,333 1,632 97 6,062 2,374 2,524 3,538 116 (7) 2,304 1,635 1,635 0 0 1,189 1.40 1.40 4.79 43 0 0 932 884 61 26 965 572 0 393
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