-----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, K429nA5kq9whuI2mzwmxVM0OMdIxbVp+4F++AB2jx3cEos/uZEDKhVylfXDvLQkV Yx0lGgQNCjHtnI6DXUesgQ== 0000950169-00-000477.txt : 20000512 0000950169-00-000477.hdr.sgml : 20000512 ACCESSION NUMBER: 0000950169-00-000477 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POTOMAC BANCSHARES INC CENTRAL INDEX KEY: 0000925173 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 550732247 STATE OF INCORPORATION: WV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24958 FILM NUMBER: 625803 BUSINESS ADDRESS: STREET 1: 111 EAST WASHINGTON ST CITY: CHARLES TOWN STATE: WV ZIP: 25414 BUSINESS PHONE: 3047258431 MAIL ADDRESS: STREET 1: P O BOX 906 CITY: CHARLES TOWN STATE: WV ZIP: 25414 10QSB 1 POTOMAC BANCSHARES U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) XX Quarterly report under Section 13 or 15(d) of the Securities Exchange Act - ---- of 1934 For quarterly period ended March 31, 2000 -------------- Transition report under Section 13 or 15(d) of the Exchange Act - ---- For the transition period from to ---------- ---------- Commission file number 0-24958 Potomac Bancshares, Inc. (Exact Name of Small Business Issuer as Specified in Its Charter) West Virginia 55-0732247 (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification Number) 111 East Washington Street, Charles Town WV 25414-1071 (Address of Principal Executive Offices) (Zip Code) 304-725-8431 (Issuer's Telephone Number, Including Area Code) NO CHANGE (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter 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 XXX No --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No Not applicable --- --- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 600,000 shares -------------- Transitional Small Business Disclosure Format (check one): Yes No XXX --- --- PART I. FINANCIAL INFORMATION Item 1. Financial Statements POTOMAC BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS (000 OMITTED)
(Unaudited) March 31 December 31 2000 1999 ---------- ----------- Assets: Cash and due from banks $ 5 787 $ 5 523 Securities purchased under agreements to resell and federal funds sold 10 970 15 531 Securities held to maturity (fair value of $20,755 at March 31, 2000 and $14,917 at December 31, 1999 20 911 15 007 Securities available for sale, at fair value 27 246 27 281 Loans, net of allowance for loan losses of $1,206 at March 31, 2000 and $1,218 at December 31, 1999 77 723 77 112 Other real estate owned 125 202 Bank premises and equipment, net 2 592 2 143 Accrued interest receivable 1 130 1 112 Other assets 940 803 -------- -------- Total Assets $147 424 $144 714 ======== ======== Liabilities and Stockholders' Equity: Liabilities: Non-interest bearing deposits $ 16 793 $ 16 034 Interest bearing deposits 112 015 110 650 -------- -------- Total Deposits 128 808 126 684 Accrued interest payable 292 308 Other liabilities 1 268 1 034 -------- -------- Total Liabilities $130 368 $128 026 -------- -------- Stockholders' Equity: Common stock par value $1.00 per share (5,000,000 shares authorized, 600,000 shares issued and outstanding) $ 600 $ 600 Surplus 5 400 5 400 Accumulated other comprehensive income (loss) (281) (256) Undivided profits 11 337 10 944 -------- -------- Total Stockholders' Equity 17 056 16 688 -------- -------- Total Liabilities and Stockholders' Equity $147 424 $144 714 ======== ========
See Accompanying Notes to Consolidated Financial Statements POTOMAC BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (000 omitted except for per share data) (Unaudited)
For the Three Months Ended March 31 ---------------------------- 2000 1999 -------- -------- Interest Income: Interest and fees on loans $1 665 $ 1650 Interest on investment securities Taxable 280 364 Interest and dividends on securities available for sale Taxable 404 324 Dividends 8 7 Interest on securities purchased under agreements to resell and federal funds sold 139 120 ------ ------ Total Interest Income $2 496 $2 465 Interest Expense, interest on deposits 975 1 074 ------ ------ Net Interest Income $1 521 $1 391 Provision for Loan Losses -- -- ------ ------ Net Interest Income after Provision for Loan Losses $1 521 $1 391 ------ ------ Other Income: Commissions and fees from fiduciary activities $ 127 $ 193 Service charges on deposit accounts 77 84 Fees for other customer services 32 39 Other operating income 26 60 ------ ------ Total Other Income $ 262 $ 376 ------ ------ Other Expenses: Salaries and employee benefits $ 728 $ 634 Net occupancy expense of premises 60 48 Furniture and equipment expenses 93 102 Other operating expenses 276 306 ------ ------ Total Other Expenses $1 157 $1 090 ------ ------ Income before Income Tax Expense $ 626 $ 677 Income Tax Expense 233 249 ------ ------ Net Income $ 393 $ 428 ====== ====== Earnings Per Share, basic and diluted $.65 $.71 ====== ======
See Accompanying Notes to Consolidated Financial Statements POTOMAC BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (000 Omitted) (Unaudited)
Accumulated Other Common Capital Undivided Comprehensive Comprehensive Stock Surplus Profits Income Income Total ------ ------- ------------ -------------- -------------- ------- - --- Balances, December 31, 1998 $600 $5 400 $10 091 $ 105 $16 196 Comprehensive income Net income -- -- 428 -- $428 428 Other comprehensive income net of tax, unrealized holding (losses) arising during the period -- -- -- (74) (74) (74) ---- Comprehensive income $354 ---- ------ ------- ------ ==== ------- Balances, March 31, 1999 $600 $5 400 $10 519 $ 31 $16 550 ==== ====== ======= ====== ======= Balances, December 31, 1999 $600 $5 400 $10 944 $(256) $16 688 Comprehensive income Net income -- -- 393 -- $393 393 Other comprehensive income net of tax, unrealized holding (losses) arising during the period -- -- -- (25) (25) (25) ---- Comprehensive income $368 ---- ------ ------- ------ ==== ------- Balances, March 31, 2000 $600 $5 400 $11 337 $(281) $17 056 ==== ====== ======= ===== =======
See Accompanying Notes to Consolidated Financial Statements POTOMAC BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (000 Omitted) (Unaudited)
For the Three Months Ended ---------------------------------- March 31 March 31 2000 1999 ----------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 393 $ 428 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses -- -- Depreciation 51 62 Amortization -- 9 Discount accretion and premium amortization on securities, net (7) 10 Gain on sale of real estate (19) (54) Gain on sale of equipment (1) -- (Increase) in accrued interest receivable (18) (36) (Increase) decrease in other assets (124) 11 (Decrease) in accrued interest payable (16) (20) Increase in other liabilities 234 278 ------- ------- Net cash provided by operating activities $ 493 $ 688 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturity of securities held to maturity $ 2 000 $ -- Proceeds from maturity of securities available for sale -- 3 000 Purchase of securities held to maturity (7 898) -- Purchase of securities available for sale -- (3 221) Net (increase) in loans (611) (587) Purchases of bank premises and equipment (500) (17) Proceeds from sale of real estate 95 163 ------- ------- Net cash (used in) investing activities $(6 914) $ (662) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in non-interest bearing deposits $ 759 $(1 505) Net increase (decrease) in interest bearing deposits 1 365 (42) ------- ------- Net cash provided by (used in) financing activities $ 2 124 $(1 547) ------- ------- (Decrease) in cash and cash equivalents $(4 297) $(1 521) CASH AND CASH EQUIVALENTS Beginning 21 054 18 129 ------- ------- Ending $16 757 $16 608 ======= ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash payments for: Interest $ 991 $ 1 095 ======= ======= Income taxes $ 17 $ -- ======= ======= SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Other real estate acquired in settlement of loans $ -- $ 125 ======= ======= Loans made on sale of real estate $ -- $ 191 ======= ======= Unrealized gain (loss) on securities available for sale $ (37) $ (113) ======= =======
See Accompanying Notes to Consolidated Financial Statements POTOMAC BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999 1. In the opinion of management, the accompanying financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 2000, and December 31, 1999, and the results of operations and cash flows for the three months ended March 31, 2000 and 1999. The statements should be read in conjunction with Notes to Consolidated Financial Statements included in the Potomac Bancshares, Inc. 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. 2. Securities held to maturity as of March 31, 2000 and December 31, 1999 are summarized below:
(000 Omitted) March 31, 2000 ------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value --------- ---------- ------------- ------- Securities held to maturity: U.S. Treasury securities $ 2 000 $ -- $ -- $ 2 000 Obligations of U.S. Government agencies 18 911 -- (156) 18 755 --------- -------- -------- ------- $20 911 $ -- $(156) $20 755 ========= ======== ======== ======= (000 Omitted) December 31, 1999 ------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value --------- ---------- ------------- ------- Securities held to maturity: U.S. Treasury securities $ 2 000 $ 2 $ -- $ 2 002 Obligations of U.S. Government agencies 13 007 1 (93) 12 915 --------- -------- -------- ------- $15 007 $ 3 $ (93) $14 917 ========= ======== ======== =======
Securities available for sale as of March 31, 2000 and December 31, 1999 are summarized below:
(000 Omitted) March 31, 2000 ------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value --------- ---------- ------------- ------- Securities available for sale: U.S. Treasury securities $ 2 000 $ -- $ -- $ 2 000 Obligations of U.S. Government agencies 25 221 -- (425) 24 796 Federal Home Loan Bank stock 450 -- -- 450 ------- -------- ----------- ------- $27 671 $ -- $(425) $27 246 ======= ======== =========== =======
(000 Omitted) December 31, 1999 ------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value --------- ---------- ------------- ------- Securities held to maturity: U.S. Treasury securities $ 2 000 $ 1 $ -- $ 2 001 Obligations of U.S. Government agencies 25 220 -- (390) 24 830 Federal Home Loan Bank stock 450 -- -- 450 --------- -------- -------- ------- $27 670 $ 1 $(390) $27 281 ========= ======== ======== =======
3. The consolidated loan portfolio, stated at face amount, is composed of the following:
(000 Omitted) March 31 December 31 2000 1999 -------- ----------- Real estate loans: Construction and land development $ 14 $ 31 Secured by farmland 2 658 2 605 Secured by 1-4 family residential 43 915 43 798 Other real estate loans 11 625 11 859 Loans to farmers (except those secured by real estate) 345 389 Commercial and industrial loans (except those secured by real estate) 1 944 2 435 Loans to individuals for personal expenditures 18 223 16 879 All other loans 205 334 ------- ------- Total loans $78 929 $78 330 ======= =======
4. The following is a summary of transactions in the reserve for loan losses:
(000 Omitted) March 31 December 31 2000 1999 -------- ----------- Balance at beginning of period $ 1 218 $ 1 140 Provision charged to operating expense -- 125 Recoveries added to the reserve 10 42 Loan losses charged to the reserve (22) (89) ------- ------- Balance at end of period $ 1 206 $ 1 218 ======= =======
5. Information about impaired loans as of March 31, 2000 and December 31, 1999 is as follows:
(000 Omitted) March 31 December 31 2000 1999 -------- ----------- Impaired loans for which a reserve has been provided $ 232 $ 232 Impaired loans for which no reserve has been provided -- -- ----- ----- Total impaired loans $ 232 $ 232 ===== ===== Reserve provided for impaired loans, included in the reserve for loan losses $ 69 $ 69 ===== ===== Average balance in impaired loans $ 331 $ 373 ===== ===== Interest income recognized $ 5 $ 22 ===== =====
Nonaccrual loans excluded from impaired loan disclosures under FASB 114 amounted to $112,844 at March 31, 2000 and at December 31, 1999. If interest on these loans had been accrued, such income would have been $2,522 for the first three months of 2000 and $5,377 in 1999. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Between December 31, 1999 and March 31, 2000, total assets have increased $2,700,000. Investments overall have increased $1,300,000. There has been a shift from our daily investments to the held to maturity investment portfolio of $4,500,000 to reduce liquidity since Y2K has presented no problems for the Bank. There has been an additional increase of $1,300,000 in the held to maturity investments. Loans to consumers are up $1,300,000 since December 31. There are decreases in other loan categories to bring the net increase in loans to $600,000. Bank premises and equipment has increased $450,000 due to the building and renovation project scheduled for completion by the end of June. The March 31 annualized return on average assets is 1.08% compared to 1.05% at December 31. At March 31 the annualized return on average equity is 9.32% compared to 9.33% at December 31. The leverage capital (equity to assets) ratio is 11.57% at March 31 compared to 11.55% at December 31. The table on the next page is an analysis of the Corporation's reserve for loan losses. Net charge-offs for the Corporation have been very low when compared with the size of the total loan portfolio. Management monitors the loan portfolio on a quarterly basis with procedures that allow for problem loans and potentially problem loans to be highlighted and watched. Based on experience, the loan policies and the current monitoring program, management believes the loan loss reserve is adequate.
(000 Omitted) March 31, 2000 -------------- Balance at beginning of period $1 218 Charge-offs: Commercial, financial and agricultural -- Real estate - construction -- Real estate - mortgage -- Consumer 22 ------ Total charge-offs 22 ------ Recoveries: Commercial, financial and agricultural -- Real estate - construction -- Real estate - mortgage -- Consumer 10 ------ Total recoveries 10 ------ Net charge-offs 12 Additions charged to operations -- ------ Balance at end of period $1 206 ====== Ratio of net charge-offs during the period to average loans outstanding during the period .0153% ======
Loans are placed on nonaccrual status when a loan is specifically determined to be impaired or when principal or interest is delinquent for 90 days or more. Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Following is a table showing the risk elements in the loan portfolio.
(000 Omitted) March 31, 2000 -------------- Nonaccrual loans $113 Restructured loans -- Foreclosed properties 125 ---- Total nonperforming assets $238 ==== Loans past due 90 days accruing interest $251 ==== Reserve for loan losses to period end loans 1.53% ==== Nonperforming assets to period end loans and foreclosed properties .301% ====
At March 31, 2000, other potential problem loans totalled $10,196. Loans are viewed as potential problem loans according to the ability of such borrowers to comply with current repayment terms. These loans are subject to constant management attention, and their status is reviewed on a regular basis. Management has allocated a portion of the reserve for these loans according to the review of the potential loss in each loan situation. Total deposits have increased slightly over $2,000,000 as of March 31, 2000 compared with December 31, 1999. This net increase is made up of increases and decreases among the various account types. Non of these changes appear to be particularly significant at this time. The comparison of the income statements for the three months ended March 31, 2000 and 1999 shows a decrease of 8% in net income in 2000. Net interest income increased 9%, interest income increased slightly over 1%, and interest expense decreased 9%. The decrease in interest expense as of March 31, 2000 compared with March 31, 1999, is due to the decrease in rates as well as the decrease in deposit balances. Noninterest income decreased 30% as of March 31, 2000 compared to March 31, 1999. This was partially due to slight decreases in service charges on deposit accounts and fees for other customer services. In addition fiduciary activities and other operating income show marked decreases. Decreases in theses two areas are due to the fact that during the quarter ended March 31, 1999, those same areas showed marked increases due to estate fee income and gain on sale of real estate which did not occur to such an extent in the quarter ended March 31, 2000. Noninterest expense increased almost 6%. The majority of this increase is due to almost a 15% increase in salaries and employee benefits in 2000 compared to 1999. There are several reasons for this. As of January 1, 1999, the Bank changed employee insurance coverage and due to the change the expenses were minimal during the first quarter but were caught up during the rest of the year. Insurance coverage expenses during 2000 are more normal. Also wages were increased as of January 1, 2000, among the teller operation to remain competitive in the market place and to keep employees for a longer term of employment. Liquid assets of the Corporation include cash and due from banks, securities purchased under agreements to resell, securities available for sale, and loans and investments maturing within one year. The Corporation's statement of cash flows details this liquidity. Net income after certain adjustments for noncash transactions provided cash from operating activities. Funds from maturity of securities held to maturity and cash on hand were used to fund investing activities. Financing activities provided funds since total deposits increased. Cash and cash equivalents decreased during this period, but liquidity of the Corporation is more than adequate to meet present and future financial obligations. PART II. OTHER INFORMATION Item 1. Legal Proceedings. There are no material legal proceedings to which the Registrant or its subsidiary, directors or officers is a party or by which they, or any of them, are threatened. All legal proceedings presently pending or threatened against Potomac Bancshares, Inc. and its subsidiary involve routine litigation incidental to the business of the Company or the subsidiary and are either not material in respect to the amount in controversy or fully covered by insurance. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 2. Plan of acquisition, reorganization, arrangement, liquidation or succession. Not applicable 4. Instruments defining the rights of security holders, including indentures. Not applicable 10. Material contracts. Not applicable 11. Statement re: computation of per share earnings. Not applicable 15. Letter on unaudited interim financial information. Not applicable 18. Letter on change in accounting principles. Not applicable 19. Reports furnished to security holders. Not applicable 22. Published report regarding matters submitted to vote of security holders. Not applicable 23. Consent of experts and counsel. Not applicable 24. Power of attorney. Not applicable 27. Financial Data Schedule. 99. Additional exhibits. Not applicable (b) Reports on Form 8-K: NONE SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. POTOMAC BANCSHARES, INC. Date May 11, 2000 /s/ Charles W. LeMaster ------------- ------------------------------------ Charles W. LeMaster, President & CEO Date May 11, 2000 /s/ L. Gayle Marshall Johnson ------------- ------------------------------------- L. Gayle Marshall Johnson, Vice President and Chief Financial Officer EX-27 2 FDS
9 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 5,787 99 10,970 0 27,246 20,911 20,755 78,929 1,206 147,424 128,808 0 1,268 0 0 0 600 16,456 147,424 1,665 692 139 2,496 975 975 1,521 0 0 1,157 626 393 0 0 393 .65 .65 7.38 113 251 0 10 1,218 22 10 1,206 1,206 0 0
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