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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-22283
VIRGINIA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1829288
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
24 South Augusta Street, Staunton, Virginia 24401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (540) 885-1232
NONE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:
Class: Common Stock, $5.00 par value
Outstanding as of July 15, 1998: 4,000,000
<PAGE>
VIRGINIA FINANCIAL CORPORATION
INDEX
Page
No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Income 3
Consolidated Balance Sheet 5
Consolidated Statements of Cash Flows 6
Consolidated Statements of Changes in Stockholders' Equity 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Results of 11
Operations and Financial Condition
Part II. Other Information
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 14
<PAGE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
JUNE 30 JUNE 30
1998 1997
------------------- ------------------
<S> <C>
Interest Income:
Interest and Fee Income on Loans:
Secured by Real Estate $ 4,098 $ 3,642
To Finance Agriculture & Farmers 77 71
Commercial & Industrial 883 855
Individuals for Household & Personal 917 859
Obligations of State & Political
Tax-Exempt 3 5
Interest and Dividend Income on Securities:
U.S. Treas & U.S. Gov't Agencies 1,424 1,453
State & Political-Taxable 37 18
State & Political-Tax Exempt 194 173
Other Domestic Debt Securities 0 3
Equity Securities 5 0
Interest on Federal Funds Sold 78 18
----------- ------------
Total Interest Income 7,716 7,097
Interest Expense:
Interest on Deposits:
NOW Accounts 301 281
Money Market Accounts 556 553
Other Savings Deposits 259 272
CD's of 100M or More 297 281
All Other Time Deposits 2,039 1,683
Interest on Fed Funds Purch'd
& Repurchase Agreements 83 94
----------- ------------
Total Interest Expense 3,535 3,164
Net Interest Income 4,181 3,933
Provision for Loan Losses 170 238
Non-Interest Income:
Fiduciary Income 312 201
Service Charges on Deposit Accts. 218 160
Other Fee Income 399 255
All Other Non-Interest Income 28 28
----------- ------------
Total Non-Interest Income 957 644
Realized Gain (Losses) on AFS Securities 0 0
Non-Interest Expense:
Salaries & Employee Benefits 1,471 1,383
Expense of Premise & Fixed Assets 283 284
Other Non-Interest Expense 762 741
----------- ------------
Total Non-Interest Expense 2,516 2,408
Income Before Income Taxes 2,452 1,931
Applicable Income Taxes 776 603
----------- ------------
Net Income $ 1,676 $ 1,328
=========== ============
Per Share Data Net Income, Basic and Diluted * $ 0.42 $ 0.33
Cash Dividends * $ 0.15 $ 0.13
</TABLE>
* Adjusted for 100% Stock Dividend, December 1997
The accompanying notes are an integral part of these statements
3
<PAGE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Six Months Ended
JUNE 30 JUNE 30
1998 1997
------------------- ------------------
<S> <C>
Interest Income:
Interest and Fee Income on Loans:
Secured by Real Estate $ 8,265 $ 7,181
To Finance Agriculture & Farmers 147 137
Commercial & Industrial 1,760 1,686
Individuals for Household & Personal 1,836 1,678
Obligations of State & Political
Tax-Exempt 6 10
Interest and Dividend Income on Securities:
U.S. Treas & U.S. Gov't Agencies 2,771 2,909
State & Political-Taxable 74 39
State & Political-Tax Exempt 363 358
Other Domestic Debt Securities 0 7
Equity Securities 5 0
Interest on Federal Funds Sold 139 27
----------- ------------
Total Interest Income 15,366 14,032
Interest Expense:
Interest on Deposits:
NOW Accounts 586 556
Money Market Accounts 1,120 1,090
Other Savings Deposits 512 540
CD's of 100M or More 616 576
All Other Time Deposits 4,013 3,345
Interest on Fed Funds Purch'd
& Repurchase Agreements 165 178
----------- ------------
Total Interest Expense 7,012 6,285
Net Interest Income 8,354 7,747
Provision for Loan Losses 408 313
Non-Interest Income:
Fiduciary Income 622 602
Service Charges on Deposit Accts. 435 311
Other Fee Income 774 525
All Other Non-Interest Income 53 59
----------- ------------
Total Non-Interest Income 1,884 1,497
Realized Gain (Losses) on AFS Securities 0 0
Non-Interest Expense:
Salaries & Employee Benefits 2,908 2,732
Expense of Premise & Fixed Assets 578 550
Other Non-Interest Expense 1,494 1,409
----------- ------------
Total Non-Interest Expense 4,980 4,691
Income Before Income Taxes 4,850 4,240
Applicable Income Taxes 1,542 1,330
----------- ------------
Net Income $ 3,308 $ 2,910
=========== ============
Per Share Data Net Income, Basic and Diluted * $ 0.83 $ 0.73
Cash Dividends * $ 0.30 $ 0.27
</TABLE>
*Adjusted for 100% Stock Dividend, December 1997
The accompanying notes are an integral part of these statements
4
<PAGE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1998 1997
----------- -----------
<S> <C>
ASSETS
Cash & Due from Banks $ 20,816 $ 14,684
Federal Funds Sold 475 0
Securities -
U.S. Government 12,675 13,130
U.S. Agencies 82,435 82,689
Municipal Bonds 20,694 17,590
Equity Securities 1,281 0
----------- -----------
Total Securities 117,085 113,409
Loans
Secured by Real Estate 186,586 188,667
To Finance Agriculture & Farmers 2,732 2,726
Commercial & Industrial 33,854 34,434
Individuals for Household & Personal 43,399 42,955
Obligations of State & Political
Tax Exempt 268 373
Other Loans 322 426
----------- -----------
Total Loans 267,161 269,581
Less Reserve for
Loan Losses (3,547) (3,752)
----------- -----------
Net Loans 263,614 265,829
Bank Premises and Equipment 4,940 4,794
Deposit Intangibles 254 266
Other Assets 5,405 5,017
----------- -----------
Total Assets $ 412,589 $ 403,999
=========== ===========
LIABILITIES AND CAPITAL
Deposits
Demand $ 56,147 $ 54,457
NOW Accounts 41,103 42,897
Money Market Checking 59,068 57,950
Savings 35,513 35,472
Time Deposits 169,432 161,391
----------- -----------
Total Deposits 361,263 352,167
Securities Sold Under
Agmt. to Repurchase 6,165 4,960
Federal Funds Purchased 0 4,550
Other Liabilities 1,723 987
Stockholders' Equity
Capital Stock 20,000 20,000
Surplus 13,554 13,554
Unrealized Gain (Loss) on AFS Securities 150 155
Undivided Profits 9,734 7,626
----------- -----------
Total Equity 43,438 41,335
----------- -----------
Total Liabilities
and Capital $ 412,589 $ 403,999
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six Months Ended
JUNE 30 JUNE 30
1998 1997
----------- -----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 15,227 $ 13,952
Fees and other non-interest income 1,872 1,484
Interest paid (6,738) (6,343)
Cash paid to suppliers and employees (4,301) (4,191)
Income taxes paid (1,703) (1,455)
----------- -----------
Net cash provided by operating activities $ 4,357 $ 3,447
----------- -----------
Cash flows from investing activities
Maturities of securities 27,380 11,505
Proceeds from sales of securities 0 0
Purchases of securities (31,048) (5,750)
Net (increase) decrease in loans 1,806 (13,140)
Proceeds from sale of equipment 1 3
Capital expenditures (409) (264)
Purchase of other assets (31) (70)
----------- -----------
Net cash used in investing activities $ (2,301) $ (7,716)
----------- -----------
Net cash provided by financing activities
Net increase in certificates of deposit 8,040 23,487
Net increase (decrease) in demand & savings deposits 1,056 (6,866)
Net increase (decrease) in federal funds purchased (4,550) (5,000)
Net increase (decrease) in securities sold
under repurchase agreements 1,205 3,405
Dividends paid (1,200) (1,080)
----------- -----------
Net cash provided by financing activities $ 4,551 $ 13,946
----------- -----------
Net increase in cash and cash equivalents 6,607 9,677
Cash and cash equivalents at beginning of year 14,684 16,287
----------- -----------
Cash and cash equivalents at end of year $ 21,291 $ 25,964
=========== ===========
</TABLE>
6
<PAGE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six Months Ended
JUNE 30 JUNE 30
1998 1997
----------- ----------
<S> <C>
Reconciliation of net income to net cash provided by
operating activities
Net income $ 3,308 $ 2,910
----------- ----------
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 262 249
Provision for loan losses 408 313
(Gain) Loss on sale of equipment 0 0
Realized Gains on available for sale securities 0 0
Increase (decrease) in taxes payable (61) (9)
(Increase) decrease in interest receivable (117) (85)
Increase (Decrease) in interest payable 274 (58)
(Increase) in prepaid expenses (269) (375)
Increase in accrued expenses 529 427
Amortization and accretion 41 60
Increase (Decrease) in deferred income (6) 1
(Increase) decrease in fees receivable (12) 14
----------- ----------
Total Adjustments $ 1,049 $ 537
----------- ----------
Net cash provided by operating activities $ 4,357 $ 3,447
=========== ==========
</TABLE>
Supplemental schedule of non-cash investing activities:
Other real estate acquired in settlement of loans
The accompanying notes are an integral part of these statements
7
<PAGE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1997 AND 1998
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Accumulated
other
Common Comprehensive Comprehensive Retained
Stock Surplus Income Income Earnings
------ ------- ------------- ------------- --------
<S> <C>
Balances, December 31, 1996 10,000 13,554 (91) 14,111
Comprehensive Income:
Net income 2,910 2,910
Other comprehensive income
net of tax
Unrealized loss on
available for sale
securities (29) (29)
----------
Total comprehensive
income 2,881
==========
Cash dividends (1,080)
---------- ---------- ---------- ----------
Balances, June 30, 1997 10,000 13,554 (120) 15,941
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
other
Common Comprehensive Comprehensive Retained
Stock Surplus Income Income Earnings
------ ------- ------------- ------------- --------
<S> <C>
Balances, December 31, 1997 20,000 13,554 155 7,626
Comprehensive Income:
Net income 3,308 3,308
Other comprehensive income
net of tax
Unrealized loss on
available for sale
securities (5) (5)
----------
Total comprehensive
income 3,303
==========
Cash dividends (1,200)
---------- ---------- ---------- ----------
Balances, June 30, 1998 20,000 13,554 150 9,734
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
8
<PAGE>
VIRGINIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Interim Financial Statements
The accompanying financial statements of Virginia Financial
Corporation and its Subsidiary have not been audited by independent accountants
for the second quarter of 1998. The balance sheet at December 31, 1997 has been
audited by independent accountants.
Note 2. Securities as of June 30, 1998 and December 31, 1997 are summarized
below.
<TABLE>
<CAPTION>
(000 Omitted)
June 30, 1998 December 31, 1997
Unrealized Unrealized
Book Market Gain (Loss) Book Market Gain (Loss)
---- ------ ----------- ---- ------ -----------
<S> <C>
Securities Available for Sale
U.S. Treasury Securities $ 12,580 $ 12,675 $ 95 $ 13,025 $ 13,130 $ 105
U.S. Agency Securities 52,139 52,269 130 42,899 43,029 130
Obligations of State and
Political Subdivisions 1,048 1,051 3 0 0 0
Other Securities 0 0 0 0 0 0
----------- ---------- ------------ ---------- ---------- -----------
Total Securities Available for Sale $ 65,767 $ 65,995 $ 228 $ 55,924 $ 56,159 $ 235
Securities Held to Maturity
U.S. Treasury Securities $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
U.S. Agency Securities 30,166 30,203 37 39,660 39,604 (56)
Obligations of State and
Political Subdivisions 19,643 19,810 167 17,590 17,762 172
Other Securities 1,281 1,281 0 0 0 0
----------- ---------- ------------ ---------- ---------- -----------
Total Securities Held to Maturity $ 51,090 $ 51,294 $ 204 $ 57,250 $ 57,366 $ 116
</TABLE>
9
<PAGE>
VIRGINIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
Note 3. The consolidated loan portfolio, stated at face amount, is
composed of the following:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C>
Real Estate Loans:
Construction and Land Development 18,248 20,183
Secured by Farm Land 1,140 1,316
Secured by 1-4 Family residential 121,888 128,130
Other Real Estate Loans 45,310 39,037
Loans to Farmers (Except Those Secured by Real Estate) 2,732 2,725
Commercial and Industrial Loans
(Except Those Secured by Real Estate) 33,854 34,434
Loans to Individuals for Personal Expenditures 43,776 43,364
All Other Loans 590 799
------------ ------------
Total Loans 267,538 269,988
Less Unearned Income Reflected in Loans 377 406
------------ ------------
Loans, Net of Unearned Income 267,161 269,582
============ ============
</TABLE>
The Bank had loans in a Nonaccrual category of $813 on December 31, 1997 and
$804 on June 30, 1998
Note 4. Allowance for Loan Losses
Analysis of the Allowance for Loan Losses
For the Six Months Ended
June 30, 1998 June 30, 1997
------------- -------------
Balance at Beginning of Period 3,753 3,039
Charge-Offs (637) (75)
Recoveries 23 25
------------ ------------
Net Charge-Offs (614) (50)
Provision for Loan Losses 408 313
------------ ------------
Balance at End of Period 3,547 3,302
============ ============
10
<PAGE>
VIRGINIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. New Accounting Pronouncements
Effective January 1, 1998, the company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This statement
establishes standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in a full of general purpose
financial statements. Financial statements for prior periods have been restated
as required.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net income for the second quarter of 1998 was $1,676,000 compared to
$1,328,000 for the second quarter of 1997. This represents an increase of
$348,000 or 26.2%. Net income for the first six months of 1998 compared to the
first six months of 1997 increased by $398,000 or 13.68%. Net interest income
for the second quarter of 1998 compared to the second quarter of 1997 increased
by $248,000 or 6.31%. The interest spread for the first six months of 1998 was
3.52% compared to 3.60% for the same period of 1997. Non-interest income for the
first six months of 1998 compared to the first six months of 1997 increased
$387,000 or 25.83% and comparing the second quarter of 1998 to the second
quarter of 1997 increased by $313,000 or 48.60%. These increases were in
fiduciary income, service charges on deposit accounts and other fee income.
Other fee income increases were due to fee income produced by secondary mortgage
activity and sales of non-FDIC insured products. Non-interest expenses for the
first six months of 1998 compared to the first six months of 1997 increased
$288,000 or 6.14%, and increased the second quarter of 1998 compared to 1997 by
$108,000 or 4.49%. These increases represent increases in salary levels,
employee benefits, fixed assets and general operating expenses.
Financial Condition
Total assets the second quarter of 1998 decreased by $242,000 or 0.06%
compared to an increase the second quarter of 1997 of $15,736,000 or 4.16%.
Assets the first six months of 1998 increased $8,590,000 or 2.13% compared to an
increase of $17,888,000 or 4.56% the first six months of 1997. The increases in
1997 and 1998 were primarily in the time deposit area and was used to fund loan
growth.
Future Operations
Management has not planned and does not anticipate any significant changes
in the nature or methods of operations of the Bank's ongoing business in the
third quarter of 1998.
New Accounting Pronouncements
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, "Employers Disclosures
about Pensions and Other Post Retirement Benefits." This statement revises
employers' disclosures about pension and other postretirement benefit plans. It
does not change the measurement or recognition of those plans. This Statement
standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practicable, requires additional information on changes
in the benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures.
11
<PAGE>
Restatement of disclosures for earlier periods is required. This Statement is
effective for the company's financial statements for the year ended December 31,
1998.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement requires companies to record derivatives
of the balance sheet as assets and liabilities, measured at fair value. Gains or
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 tandard as required by January 1, 2000.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." This SOP provides
guidance on accounting for the costs of computer software developed or obtained
for internal use. This SOP requires that entities capitalize certain internal
use software costs once certain criteria are met. This statement is not expected
to have a material impact on the Company's financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities," which requires the costs of start-up activities and
organization costs to be expensed as incurred. This statement is effective for
the fiscal year 1999 financial statements. This statement is not expected to
have a material impact on the Company's financial statements.
The Bank utilizes and is dependent upon data processing systems and
software to conduct its business. The data processing systems and software are
provided by a service bureau. In 1997, the Bank initiated a review and
assessment of all of its computer hardware and software to confirm that it will
function properly in the year 2000.
The service bureau has indicated the processing system is year 2000
compliant. The majority of the Bank's vendors have been contacted and have
indicated that their hardware/software will be year 2000 compliant. Testing will
continue to be performed on all systems and hardware for compliance. While there
may be additional compliance expenses incurred during the next two years, Year
2000 compliance is not expected to have a material effect on the Bank's
consolidated financial statements.
Bank management recognizes the potential credit risk within its commercial
portfolio for Year 2000 noncompliance. Accordingly, Bank officers are contacting
all commercial credit customers with relationships greater than $100,000 to
verify that they are currently Year 2000 compliant or that they have a plan to
become compliant.
12
<PAGE>
VIRGINIA FINANCIAL CORPORATION
AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
<TABLE>
<CAPTION>
(000 Omitted)
Six Months Ended June 30
1998 1997
Average Income/ Yield/ Average Income/ Yield/
ASSETS Balance Expense Rate Balance Expense Rate
----------- --------- ---------- ----------- -------- --------
<S> <C>
Securities:
Taxable $ 95,924 $ 2,849 5.94% $ 99,594 $ 2,955 5.93%
Tax-exempt (1) 16,486 550 6.67% 16,166 543 6.72%
----------- --------- ---------- ----------- -------- --------
Total Securities $ 112,410 $ 3,399 6.05% $ 115,760 $ 3,498 6.04%
Loans (net of earned income):
Taxable 269,342 12,008 8.92% 239,907 10,681 8.90%
Tax-Exempt (1) 313 10 6.39% 523 16 6.12%
----------- --------- ---------- ----------- -------- --------
Total Loans 269,655 12,018 8.91% 240,430 10,697 8.90%
Fed Funds Sold and Repurchase Agreements 5,128 139 5.42% 1,011 27 5.34%
----------- --------- ---------- ----------- -------- --------
Total Earning Assets 387,193 15,556 8.04% 357,201 14,222 7.96%
Less Allowance for Loan Losses (3,846) (3,118)
Total Nonearning Assets 25,925 23,100
----------- -----------
Total Assets $ 409,272 $ 377,183
=========== ===========
LIABILITIES AND SHAREHOLDER EQUITY
Interest bearing deposits:
NOW Accounts $ 42,426 $ 586 2.76% $ 40,145 $ 556 2.77%
Money Market Savings 57,933 1,120 3.87% 57,683 1,090 3.78%
Regular Savings 34,745 512 2.95% 36,604 540 2.95%
Certificates of Deposit:
Less than $100,000 146,267 4,013 5.49% 126,162 3,345 5.30%
$100,000 and More 22,560 616 5.46% 20,689 576 5.57%
----------- --------- ---------- ----------- -------- --------
Total Interest Bearing Deposits 303,931 6,847 4.51% 281,283 6,107 4.34%
Fed Funds Purchased 313 10 6.39% 1,673 47 5.62%
Short Term Borrowings 5,892 155 5.26% 5,102 131 5.14%
----------- --------- ---------- ----------- -------- --------
Total Interest Bearing Liabilities 310,136 7,012 4.52% 288,058 6,285 4.36%
Noninterest Bearing Liabilities
Demand Deposits 54,265 48,362
Other Liabilities 2,253 1,923
----------- -----------
Total Liabilities 366,654 338,343
Stockholders' Equity 42,618 38,840
----------- -----------
Total Liabilities and Stockholders' Equity $ 409,272 $ 377,183
Net Interest Income $ 8,544 $ 7,937
Interest Rate Spread 3.52% 3.60%
Interest Expense as a Percent of Average
Earning Assets 3.57% 3.52%
Net Interest Margin 4.42% 4.44%
</TABLE>
(1) Income and yields are reported on a taxable-equivalent basis assuming a
federal tax rate of 34% in 1997 and 1998
13
<PAGE>
VIRGINIA FINANCIAL CORPORATION
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of June 30, 1998 neither the corporation nor the bank was a party to
any legal proceedings.
ITEM 2. NOT APPLICABLE
ITEM 3. NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Virginia Financial Corporation's annual meeting of shareholders was held
on Monday, April 27, 1998 at the Corporation's main banking facility in
Staunton, Virginia. Information relating to the solicitation of proxies required
by this item is incorporated by reference from the Corporation's proxy statement
dated March 27, 1998 for the Corporation's Annual Meeting of Shareholders held
April 27, 1998, filed with the Commission on March 27, 1998.
Two items were submitted to the shareholders to be voted upon: (1) To
elect directors of the company and (2) to ratify the appointment of Yount, Hyde
& Barbour, P.C. Certified Public Accountants, as independent outside auditors
for the year ending December 31, 1998.
The votes cast for or against for the two items were as follows:
(1) Election of Directors of the company.
Name For Against
---- --- -------
Lee S. Baker 3,135,533 8,180
Benham M. Black 3,111,533 32,180
Harry V. Boney, Jr. 3,141,059 2,654
William P. Heath, Jr. 3,121,299 22,414
Jan S. Hoover 3,138,039 5,674
Martin F. Lightsey 3,141,879 1,834
James S. Quarforth 3,121,767 21,946
(2) Ratification of Yount, Hyde & Barbour P.C. Certified
Public Accountants.
For Against
--- -------
3,143,555 158
ITEM 5. NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
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.
Virginia Financial Corporation
(Registrant)
Date August 12, 1998 /s/ Fred D. Bowers
------------------------------- --------------------------------
Fred D. Bowers, Secretary/Treasurer
(Principal Accounting Officer and Duly
Authorized Officer)
14
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001036070
<NAME> VIRGINIA FEDERAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 20,816
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 475
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 71,993
<INVESTMENTS-CARRYING> 45,092
<INVESTMENTS-MARKET> 117,289
<LOANS> 267,161
<ALLOWANCE> 3,547
<TOTAL-ASSETS> 412,589
<DEPOSITS> 361,263
<SHORT-TERM> 6,165
<LIABILITIES-OTHER> 1,723
<LONG-TERM> 0
0
0
<COMMON> 20,000
<OTHER-SE> 23,438
<TOTAL-LIABILITIES-AND-EQUITY> 412,589
<INTEREST-LOAN> 12,014
<INTEREST-INVEST> 3,213
<INTEREST-OTHER> 139
<INTEREST-TOTAL> 15,366
<INTEREST-DEPOSIT> 6,847
<INTEREST-EXPENSE> 7,012
<INTEREST-INCOME-NET> 8,354
<LOAN-LOSSES> 408
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,980
<INCOME-PRETAX> 4,850
<INCOME-PRE-EXTRAORDINARY> 4,850
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,308
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
<YIELD-ACTUAL> 8.05
<LOANS-NON> 804
<LOANS-PAST> 421
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,753
<CHARGE-OFFS> 637
<RECOVERIES> 23
<ALLOWANCE-CLOSE> 3,547
<ALLOWANCE-DOMESTIC> 3,265
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 282
</TABLE>
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