-----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, QJZGkRlrJ88TsUkDVnPBkyRAgDuY/QgNDGyXUFw73/q1H4uFpw7RdjHE4e5aVAOo OUqYVW5Nzkgo0lonNntMtQ== 0001002105-99-000088.txt : 19990517 0001002105-99-000088.hdr.sgml : 19990517 ACCESSION NUMBER: 0001002105-99-000088 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: 99621297 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, 1999 [ ] 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: 1,778,994 shares of common stock, par value $5.00 per share, outstanding as of May 10, 1999 * 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 Shareholders' 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 14 Item 2. Change in securities 14 Item 3. Defaults upon senior securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other information 14 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15
-2- Part 1. Financial Information Item 1. FINANCIAL STATEMENTS Independent Community Bankshares, Inc. Consolidated Balance Sheets (In Thousands)
(Unaudited) March 31, December 31, 1999 1998 ------------------- ------------------- Assets: Cash and due from banks $ 6,577 $ 8,161 Interest-bearing balances in banks 4 109 Temporary investments: Federal funds sold 6,286 1,421 Other money market investments 1,947 3,122 Securities (fair value: March 31, 1999, $ 60,989, December 31, 1998, $ 58,159) 60,637 57,786 Loans, net 126,817 124,932 Bank premises and equipment, net 6,023 5,852 Other assets 4,161 4,020 ------------------- ------------------- Total assets $ 212,452 $ 205,403 =================== =================== Liabilities and Shareholders' Equity Liabilities: Deposits: Non-interest bearing $ 35,893 $ 36,883 Interest bearing 141,999 135,797 ------------------- ------------------- Total deposits $ 177,892 $ 172,680 Federal funds purchased $ - $ - Securities sold under agreements to Repurchase 4,943 2,530 Federal Home Loan Bank advances 5,000 6,000 Other liabilities 1,534 1,330 ------------------- ------------------- Total liabilities $ 189,369 $ 182,540 Shareholders' Equity Common stock par value $5.00 per share, authorized 10,000,000 shares; issued and outstanding at March 31, 1999 - 1,778,994 issued and outstanding at December 31, 1998 - 1,778,994 $ 8,895 $ 8,895 Capital surplus 1,293 1,293 Retained earnings 12,916 12,495 Unrealized gain (loss) on securities available for sale, net (21) 180 ------------------- ------------------- Total shareholders' equity $ 23,083 $ 22,863 Total liabilities and shareholders' equity $ 212,452 $ 205,403 =================== ===================
See Accompanying Notes to Consolidated Financial Statements. -3- Independent Community Bankshares, Inc. Consolidated Statements of Income (In Thousands, Except Per Share Data)
Unaudited Unaudited ---------------------------------------------------------------------- For the Three Months For the Quarter Ended March 31, Ended March 31, 1999 1998 1999 1998 --------------- --------------- ---------------- --------------- Interest Income Interest and fees on loans $ 2,672 $ 2,422 $ 2,672 $ 2,422 Interest on investment securities Taxable 8 27 8 27 Exempt from federal income taxes 145 163 145 163 Interest on securities available for sale Taxable 352 484 352 484 Exempt from federal income taxes 216 156 216 156 Dividends 42 46 42 46 Interest on federal funds sold and other 76 17 76 17 --------------- --------------- ---------------- --------------- Total interest income $ 3,511 $ 3,315 $ 3,511 $ 3,315 Interest expense Interest on deposits $ 1,181 $ 1,244 $ 1,181 $ 1,244 Interest on FHLB advances 71 38 71 38 Interest on short-term borrowings 32 5 32 5 --------------- --------------- ---------------- --------------- Total interest expense $ 1,284 $ 1,287 $ 1,284 $ 1,287 Net interest income $ 2,227 $ 2,028 $ 2,227 $ 2,028 Provision for loan losses 81 45 81 45 --------------- --------------- ---------------- --------------- Net interest income after provision for loan losses $ 2,146 $ 1,983 $ 2,146 $ 1,983 Other Income Commissions and fees from fiduciary Activities $ 248 $ 220 $ 248 $ 220 Service charges on deposit accounts 246 214 246 214 Net gains (losses) on securities available for sale (8) (12) (8) (12) Other operating income 177 38 177 38 --------------- --------------- ---------------- --------------- Total other income $ 663 $ 460 $ 663 $ 460 Other Expense Advertising $ 82 $ 32 $ 82 $ 32 Salaries and employee benefits 1,072 871 1,072 871 Net occupancy expense of premises 203 164 203 164 Other operating expenses 535 428 535 428 --------------- --------------- ---------------- --------------- Total other expense $ 1,892 $ 1,495 $ 1,892 $ 1,495 --------------- --------------- ---------------- --------------- Income before income taxes $ 917 $ 948 $ 917 $ 948 Income taxes 195 236 195 236 --------------- --------------- ---------------- --------------- Net income $ 722 $ 712 $ 722 $ 712 =============== =============== ================ =============== Earnings per weighted average share: (1999 - 1,778,994 1998 - 1,812,594 shares) $ 0.40 $ 0.39 $ 0.40 $ 0.39 Net income per diluted share $ 0.17 $ 0.15 $ 0.17 $ 0.15 Dividends per share
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, 1999 and 1998 (In Thousands) (Unaudited)
Accumulated Other Common Capital Comprehensive Retained Comprehensive Stock Surplus Income Earnings Income Total ----------- ----------- ----------------- ------------ ---------------- ----------- 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 =========== =========== ================= ============ =========== Balances - December 31, 1998 $ 8,895 $ 1,293 $ 180 $ 12,495 $ - $ 22,863 Comprehensive Income Net income 722 722 722 Other comprehensive income net of tax (201) Unrealized loss on available for sale securities Less: Reclassification adjustment for gains realized in net income ---------------- Other comprehensive income, net of tax (201) (201) (201) ---------------- Total comprehensive income $ 521 ================ Cash dividends declared (301) (301) ----------- ----------- ----------------- ------------ ----------- Balances - March 31, 1999 $ 8,895 $ 1,293 $ (21) $ 12,916 $ 23,083 =========== =========== ================= ============ ===========
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, 1999 1998 ---------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 722 $ 712 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 81 45 Depreciation and amortization 151 134 Net (gains) losses on securities available for sale 7 - Discount accretion and premium amortization on securities, net 29 39 Deferred taxes - - Net (gains) losses on sale of assets (7) - Net loss on sale of other real estate 5 (Increase) decrease in accrued interest receivable (357) (64) Decrease in prepaid income taxes - 99 (Increase) in other assets - (95) Increase in accrued interest payable 307 (10) Increase in other liabilities - (102) ----------------- ----------------- Net cash provided by operating activities $ 938 $ 758 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity, principal paydowns and calls of investment securities $ - $ 249 Proceeds from maturity, principal paydowns and calls of securities available for sale 1,528 1,553 Proceeds from sale of securities available for sale 1,735 354 Proceeds from sale of bank premises and equipment 75 - Purchase of investment securities - - Purchase of securities available for sale (6,453) (1,068) Net (increase) in loans (1,966) (3,800) Proceeds from sale of other real estate 195 - Purchases of bank premises and equipment (375) (156) ----------------- ----------------- Net cash (used in) investing activities $ (5,261) $ (2,868) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in demand deposits, NOW accounts, and savings accounts $ 4,809 $ 133 Net (decrease) increase in certificates of deposits 403 319 Proceeds from Federal Home Loan Bank advances - - Dividends declared (301) (273) Acquisition of common stock - - Issuance of common stock - - Payment on Federal Home Loan Bank advances (1,000) - New borrowings for Federal Home Loan Bank Advances - 1,200 Increase (decrease) in securities sold under agreement to Repurchase 2,413 (1,236) ----------------- ----------------- Net cash provided by financing activities $ 6,324 $ 143 Increase in cash and cash equivalents $ 2,001 $ (1,967) CASH AND CASH EQUIVALENTS Beginning $ 12,813 $ 8,609 ================= ================= Ending $ 14,814 $ 6,642 ================= ================= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors 1,188 1,225 Income taxes - 135 SUPPLEMENTAL DISCLOSURES FOR NON-CASH INVESTING AND FINANCING ACTIVITIES Unrealized gain (loss) on securities available for sale (303) (74)
See Accompanying Notes to Consolidated Financial Statements. -6- Independent Community Bankshares, Inc. Notes to Consolidated Financial Statements (Unaudited) For the Three Months Ended March 31, 1999 and 1998 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, 1999, and the results of operations and changes in cash flows for the three months ended March 31, 1999 and 1998. 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, 1998. The results of operations for the three month periods ended March 31, 1999 and 1998, 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, 1999 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 $ 502 $ 1 $ - $ 503 Obligations of states and Political subdivisions 11,911 352 (1) 12,262 Mortgaged backed securities 149 - - 149 ================ ============== ============ ============ $ 12,562 $ 353 $ (1) $ 12,914 ================ ============== ============ ============
-7- Securities available for sale as of March 31, 1999 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 $ 3,767 $ 1 $ (28) $ 3,740 Corporate securities 2,500 22 (29) 2,493 Obligations of states and Political subdivisions 18,583 310 (180) 18,713 Mortgaged backed securities 22,336 54 (176) 22,214 Other 915 - - 915 ---------------- -------------- -------------- ----------- $ 48,101 $ 387 $ (413) $ 48,075 ================ ============== ============== ===========
Note 3. The consolidated loan portfolio is composed of the following:
------------------------------------ March 31, December 31, 1999 1998 ------------------------------------ (In Thousands) Commercial, financial and agricultural $ 19,821 $ 18,880 Real estate construction 6,553 5,436 Real estate mortgage 93,792 93,584 Installment loans to individuals 7,803 8,095 ---------------- --------------- Total loans 127,969 125,995 Allowance for loan losses (1,152) (1,063) ---------------- ---------------- $ 126,817 $ 124,932 Loans, net ================ ================
The Company had $462,000 in non-performing assets at March 31, 1999. Note 4. The following is a summary of transactions in the reserve for loan losses: ----------------------------------- March 31, December 31, 1999 1998 ----------------------------------- (In Thousands) Balance at January 1 $ 1,063 $ 974 Provision charged to operating expense 81 135 Recoveries added to the reserve 9 40 Loan losses charged to the reserve (1) (86) ----------------- ---------------- Balance at the end of the period $ 1,152 $ 1,063 ================= ================ 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, 1999 March 31, 1998 Per share Per share Shares Amount Shares Amount ------------ ------------ ------------ ------------ Basic EPS 1,778,994 $ 0.41 1,812,594 $ 0.39 ============ ============ Effect of dilutive securities: stock options (1) 13,825 - ------------ ------------ Diluted EPS 1,792,819 $ 0.40 1,812,594 $ 0.39 ============ ============ ============ ============ (1) The anti-dilutive effects of 32,000 options were not included in the calculation. Note 6. New Accounting Pronouncements FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", was issued in June 1998. This statement requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. This statement is not expected to have a material impact on the Company's financial statements. This statement is effective for fiscal years beginning after June 15, 1999, with earlier adoption encouraged. The Company will adopt this accounting standard as required by January 1, 2000. -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, 1999 increased 1.4% to $722 thousand or $.40 per diluted share for the first quarter of 1999 compared to $712 thousand or $.39 per diluted share for the first three months of 1998. Annualized returns on average assets and equity for the period ended March 31, 1999 were 1.40% and 12.75%, respectively, compared to 1.54% and 13.66% for the same period in 1998. The total assets of Independent Community Bankshares, Inc. (the "Company") increased to $212.5 million at March 31, 1999 compared to $205.4 million at December 31, 1998 representing an increase of $7.1 million or 3%. Total loans at March 31, 1999, were $126.8 million, an increase of $1.9 million from the December 31, 1998 balance of $124.9 million. Continued loan demand fueled the loan growth experienced for the first three months of 1999. The investment portfolio increased 4.8% to $60.6 million at March 31, 1999 compared to the $57.8 million balance at December 31, 1998. Funds from deposit growth were used to purchase both obligations of U.S. Government Agencies and obligations of States and Political Subdivisions. Deposits increased to $177.9 million at March 31, 1999, from the $172.3 million balance at December 31, 1998, representing an increase of $5.6 million or 3.4%. Shareholders' equity at March 31, 1999 totaled $23.1 million compared to $22.9 million at December 31, 1998. The book value per common share on March 31,1999 was $12.98 per share compared to $12.85 at December 31, 1998. 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 $2.2 million for the first three months of 1999 compared to $2.0 million for the same period in 1998. Net interest income has been positively affected by a 5.58% increase in average earning assets during the first quarter of 1999. Noninterest Income Service charges on deposit accounts for the first three months of 1999 totaled $246 thousand compared to $214 thousand for the same period in 1998, an increase of 15%. Commission and fees from fiduciary activities were $248 thousand at March 31, 1999 compared to $220 thousand at March 31, 1998. Other Operating Income increased to $177 thousand at March 31, 1999 from the $38 thousand balance at March 31, 1998. Non-deposit investment sales commissions and loan fees from the mortgage banking department within The Middleburg Bank, the Company's banking subsidiary, account for a majority of the increase in other operating income. The Middleburg Bank opened its mortgage banking department in April 1998. -10- Noninterest Expense In support of the Company's continued growth, total noninterest expense consisting of employee related costs, occupancy and other overhead totaled $1.9 million for the first three months of 1999 compared to $1.5 million for the same period of 1998. This represents a 26.6% increase or $397 thousand. Branch expansion and mortgage banking has increased salary and benefit expense by 20.32% from $871 thousand in the first quarter of 1998 to $1.0 million for the same period in 1999. Increased marketing and Year 2000 expenses further added to the increase in non-interest expense. Allowance for Loan Losses The allowance for loan losses at March 31, 1999 was $1.2 million. This is an increase of $100 thousand or 8.4% from December 31, 1998. The ratio of the allowance for loan losses to gross loans is .90%. Management believes the allowance for loan losses is adequate to cover credit losses inherent in the loan portfolio at March 31, 1999. 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, 1999 was $23.1 million compared to $22.9 million at December 31, 1998. The retention of net income is the major contributing factor to the growth in shareholders' equity. At March 31, 1999 the Company's tier 1 and total risked-based capital ratios were 15.34% and 16.15%, respectively, compared to 17.1% and 17.9% at December 31, 1998. The Company's leverage ratio was 10.69% at March 31, 1999 compared to a ratio of 11.17% at December 31, 1998. The Company's capital structure places it above the regulatory guidelines which affords the Company the opportunity to take advantage of business opportunities while ensuring that it has resources to protect against the risks inherent in its business. Year 2000 In recent months, there has been increasing public awareness and attention paid to the year 2000 problem, which stems from the inability of certain computerized devices (hardware, software and equipment) to process year-dates properly after 1999. Leap years and other dates may be included as related to the year 2000 problem. Affected devices may fail or malfunction unless repaired or replaced. Although the actual magnitude and effect of the issue cannot be reasonably determined in advance, the Company has given it high priority by appointing a Year 2000 team. In 1997 the Year 2000 team began its analysis of the possible implications to the Company of the year 2000 problem and the development of a plan to prevent the problem from adversely affecting its operations. The Company's year 2000 plans are subject to guidelines promulgated by the Federal Financial Institutions Examination Council ("FFIEC"). The Federal Reserve Bank of Richmond periodically measures the status of the Company's plans and progress, as outlined in the FFIEC guidelines. The plan as adopted and refined by the Company to handle year 2000 issues can be divided into two principal areas: -11- (1) Resolution of the internal aspects of the year 2000 problem. The focus of this area includes the effects of the year 2000 problem on the Company's technology, including computer hardware and software systems. The Company's internal technology plan includes (a) locating, listing and prioritizing the specific technology that is potentially subject to the year 2000 problem (referred to as the "inventory" phase), (b) assessing the actual exposure of such technology to the year 2000 problem by inquiry, research, testing and other means (the "assessment" phase), (c) selecting the method necessary to resolve the year 2000 problems that were identified, including replacement, upgrade, repair or abandonment and implementing the selected resolution method (the "remediation" phase), and (d) testing the remediated or converted technology to determine the efficacy of the resolutions (the "testing" phase). (2) Determination and control of the external aspects of the year 2000 problem. The focus of this area includes (a) assessing the potential for credit and liquidity problems within the Company as a result of the investments in, loans to and deposits from our significant customers as well as the risk of possible business interruption by relying on vendors of goods and services due to year 2000 problems affecting their technology or business, and (b) developing contingency plans to address failures by external parties to remediate fully any year 2000 problems that are material to the Company. Assessment of external parties is accomplished by written and verbal inquiry, and by research to the extent that reliable information is available. The Company had substantially completed both the internal and external testing by December 31, 1998 and plans to further test its computer systems during 1999 to confirm compliance with year 2000 data processing standards. The Company considers its current state of readiness in addressing the year 2000 problem to be adequate and expects to meet the timetable. The total cost of remediation and testing is estimated to be between $250 thousand and $350 thousand, with a majority of the costs being incurred during 1998. This estimate includes some costs, such as the purchase of computer hardware and software that qualifies as a depreciable or amortizable assets for accounting purposes, with the related depreciation or amortization recognized over the estimated lives of the related assets. However, the majority of the costs will be expensed as incurred. Through December 31, 1998, the Company had incurred approximately $175 thousand in noninterest expense associated with the year 2000 problem. The Company has concluded that customer awareness about year 2000 and banking is the key factor in minimizing customer concerns about the Company's progress in planning for the year 2000. During 1999, the Company plans to inform its customers about its progress through question and answer brochures, seminars and direct mailings. The Year 2000 team of has developed a preliminary contingency plan for areas deemed "mission critical" for continual operation. The preliminary contingency plan considers the likelihood of problem occurrences based on test results. The Company's preliminary and final contingency plan addresses operational issues, including communication links with other entities and the utility and availability of alternative sources among key vendor relationships. The Year 2000 team anticipates presenting its preliminary contingency plan to the Board of Directors early in 1999 with final contingency plan tested and complete by mid 1999. The Year 2000 team will monitor the status of each item as well. At this time, the Company believes that the most likely worst case year 2000 scenario would not have a material effect on the Company's results of operations, liquidity and financial condition for the year ending December 31, 2000. The Company does not foresee a material loss of revenue due to the year 2000 problem. The Company's contingency plan, however, is based on assessments of the likelihood of a problematic occurrence; the Company believes that no entity can address the virtually -12- unlimited possible circumstances relating to year 2000 issues, including risks outside of the Company's primary marketplace of Loudoun County, Virginia. While considered unlikely, the failure of the Company to successfully implement its year 2000 plan, including modifications and conversions, or to adequately assess the likelihood of various events relating to the year 2000 issue, could have a material adverse effect on the Company's results of operations and financial condition. Additionally, there can be no assurances that the federal regulators will not issue new regulatory requirements that require additional work by the Company and, if issued, that new regulatory requirements will not increase the cost or delay the completion of the Company's year 2000 plan. The cost of the project and the date on which the Company plans to complete the year 2000 modifications are based on management's best estimates, which are based on numerous assumptions of future events including the continued availability of certain resources, third party modification plans and other factors. There can be no guarantee that these estimates will be achieved and actual results could differ materially from our plans. Specific factors that might cause such material differences include, but are not limited to, the availability of personnel trained in this area, the ability of third party vendors to correct their software and hardware, the ability of significant customers to remedy their year 2000 issues and similar uncertainties. Forward-Looking Statements 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, problems with technology utilized by the Company, 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. -13- 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 -14- 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 10, 1999 /s/ Joseph L. Boling -------------------------------------- Joseph L. Boling Chairman of the Board & CEO Date: May 10, 1999 /s/ Alice P. Frazier -------------------------------------- Alice P. Frazier Senior Vice President & CFO -15- EX-27 2 FDS --
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-QSB FOR INDEPENDENT COMMUNITY BANKSHARES, INC. FOR THE QUARTER ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1999 MAR-31-1999 6,577,769 1,950,727 6,286,000 0 48,074,048 12,562,561 12,914,699 127,696,324 1,151,944 212,452,370 177,891,830 4,943,350 1,534,139 5,000,000 0 0 8,894,970 14,188,081 212,452,370 2,671,570 763,693 75,556 3,510,817 1,180,499 1,283,637 2,227,180 81,249 0 1,892,336 916,760 916,760 0 0 721,984 0.41 0.40 4.73 462,246 0 0 514,516 1,063,558 878 8,015 1,151,944 1,151,944 0 736,210
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