|
|
|
|
|
|
|
|
|
|
|
|
|
================================================================================
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 September 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 October 31, 1998: 4,000,000
================================================================================
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
INDEX
<S> <C>
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income 3
Consolidated Balance Sheets 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 Operations
and Financial Condition 11
Part II. Other Information
Item 1. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
Signature 15
</TABLE>
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Three Months Ended
SEPTEMBER 30 SEPTEMBER 30
1998 1997
------------------- -------------------
<S> <C> <C>
Interest Income:
Interest and Fee Income on Loans:
Secured by Real Estate $ 4,138 $ 3,850
To Finance Agriculture & Farmers 79 71
Commercial & Industrial 859 821
Individuals for Household & Personal 944 889
Obligations of State & Political
Tax-Exempt 3 5
Interest and Dividend Income on Securities:
U.S. Treas & U.S. Gov't Agencies 1,381 1,503
State & Political-Taxable 25 26
State & Political-Tax Exempt 250 168
Other Domestic Debt Securities 0 1
Equity Securities 74
Interest on Federal Funds Sold 125 78
----------- -----------
Total Interest Income 7,878 7,412
Interest Expense:
Interest on Deposits:
NOW Accounts 293 272
Money Market Accounts 588 538
Other Savings Deposits 266 258
CD's of 100M or More 344 331
All Other Time Deposits 2,002 2,047
Interest on Fed Funds Purch'd
& Repurchase Agreements 121 70
----------- -----------
Total Interest Expense 3,614 3,516
Net Interest Income 4,264 3,896
Provision for Loan Losses 604 247
Non-Interest Income:
Fiduciary Income 296 234
Service Charges on Deposit Accts. 302 167
Other Fee Income 366 281
All Other Non-Interest Income 20 33
----------- -----------
Total Non-Interest Income 984 715
Realized Gain (Losses) on AFS Securities 0 0
Non-Interest Expense:
Salaries & Employee Benefits 1,408 1,475
Expense of Premise & Fixed Assets 315 273
Other Non-Interest Expense 809 721
----------- -----------
Total Non-Interest Expense 2,532 2,469
Income Before Income Taxes 2,112 1,895
Applicable Income Taxes 646 592
----------- -----------
Net Income $ 1,466 $ 1,303
=========== ===========
Per Share Data Net Income, basic and diluted * $ 0.37 $ 0.33
Cash Dividends* $ 0.15 $ 0.14
</TABLE>
* Adjusted for 100% Stock Dividend, December 1997 The accompanying notes are an
integral part of these statements
3
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Nine Months Ended
SEPTEMBER 30 SEPTEMBER 30
1998 1997
------------------- -------------------
<S> <C> <C>
Interest Income:
Interest and Fee Income on Loans:
Secured by Real Estate $ 12,403 $ 11,031
To Finance Agriculture & Farmers 226 208
Commercial & Industrial 2,619 2,507
Individuals for Household & Personal 2,780 2,567
Obligations of State & Political
Tax-Exempt 9 15
Interest and Dividend Income on Securities:
U.S. Treas & U.S. Gov't Agencies 4,152 4,412
State & Political-Taxable 99 65
State & Political-Tax Exempt 613 526
Other Domestic Debt Securities 0 8
Equity Securities 79
Interest on Federal Funds Sold 264 105
----------- -----------
Total Interest Income 23,244 21,444
Interest Expense:
Interest on Deposits:
NOW Accounts 879 828
Money Market Accounts 1,708 1,628
Other Savings Deposits 778 798
CD's of 100M or More 960 907
All Other Time Deposits 6,015 5,392
Interest on Fed Funds Purch'd
& Repurchase Agreements 286 248
----------- -----------
Total Interest Expense 10,626 9,801
Net Interest Income 12,618 11,643
Provision for Loan Losses 1,012 560
Non-Interest Income:
Fiduciary Income 918 836
Service Charges on Deposit Accts. 737 478
Other Fee Income 1,140 806
All Other Non-Interest Income 73 92
----------- -----------
Total Non-Interest Income 2,868 2,212
Realized Gain (Losses) on AFS Securities 0 0
Non-Interest Expense:
Salaries & Employee Benefits 4,316 4,207
Expense of Premise & Fixed Assets 893 823
Other Non-Interest Expense 2,303 2,130
----------- -----------
Total Non-Interest Expense 7,512 7,160
Income Before Income Taxes 6,962 6,135
Applicable Income Taxes 2,188 1,922
----------- -----------
Net Income $ 4,774 $ 4,213
=========== ===========
Per Share Data Net Income , basic and diluted* $ 1.19 $ 1.05
Cash Dividends * $ 0.45 $ 0.41
</TABLE>
* Adjusted for 100% Stock Dividend, December 1997 The accompanying notes are an
integral part of these statements
4
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Cash & Due from Banks $ 15,925 $ 14,684
Federal Funds Sold 3,200 0
Securities -
U.S. Government 11,800 13,130
U.S. Agencies 79,124 82,689
Municipal Bonds 26,624 17,590
Equity Securities 5,028 0
----------- -----------
Total Securities 122,576 113,409
Loans
Secured by Real Estate 186,809 188,667
To Finance Agriculture & Farmers 2,616 2,726
Commercial & Industrial 36,895 34,434
Individuals for Household & Personal 43,155 42,955
Obligations of State & Political
Tax Exempt 216 373
Other Loans 192 426
----------- -----------
Total Loans 269,883 269,581
Less Reserve for
Loan Losses (3,138) (3,752)
----------- -----------
Net Loans 266,745 265,829
Bank Premises and Equipment 5,348 4,794
Deposit Intangibles 248 266
Other Assets 5,199 5,017
----------- -----------
Total Assets $ 419,241 $ 403,999
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $ 56,886 $ 54,457
NOW Accounts 41,627 42,897
Money Market Checking 59,365 57,950
Savings 36,058 35,472
Time Deposits 168,781 161,391
----------- -----------
Total Deposits 362,717 352,167
Securities Sold Under
Agmt. to Repurchase 10,056 4,960
Federal Funds Purchased 0 4,550
Other Liabilities 1,567 987
Stockholders' Equity
Capital Stock 20,000 20,000
Surplus 13,554 13,554
Accumulated Other Comprehensive Income 747 155
Undivided Profits 10,600 7,626
----------- -----------
Total Stockholders' Equity 44,901 41,335
----------- -----------
Total Liabilities
and Stockholders' Equity $ 419,241 $ 403,999
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
5
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<CAPTION>
Nine Months Ended
SEPTEMBER 30 SEPTEMBER 30
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Interest received $ 22,934 $ 21,267
Fees and other non-interest income 2,853 2,169
Interest paid (10,513) (9,898)
Cash paid to suppliers and employees (6,546) (6,072)
Income taxes paid (2,294) (2,123)
----------- -----------
Net cash provided by operating activities $ 6,434 $ 5,343
----------- -----------
Cash flows from investing activities
Maturities of securities 42,020 18,765
Proceeds from sales of securities 3,745 0
Purchases of securities (53,976) (17,581)
Net increase in loans (1,928) (21,115)
Proceeds from sale of equipment 1 8
Capital expenditures (967) (584)
Purchase of other assets (164) (70)
Improvements of other real estate -21 0
----------- -----------
Net cash used in investing activities $ (11,290) $ (20,577)
----------- -----------
Cash flows from financing activities
Net increase in certificates of deposit 7,390 18,314
Net increase in demand deposits 3,160 4,543
Net (decrease) in federal funds purchased (4,550) (5,000)
Net increase in repurchase agreements 5,096 1,350
Dividends paid (1,800) (1,620)
----------- -----------
Net cash provided by financing activities $ 9,296 $ 17,587
----------- -----------
Net increase in cash and cash equivalents 4,440 2,353
Cash and cash equivalents at beginning of year 14,685 16,287
----------- -----------
Cash and cash equivalents at end of year $ 19,125 $ 18,640
=========== ===========
</TABLE>
6
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(IN THOUSANDS OF DOLLARS)
<CAPTION>
Nine Months Ended
SEPTEMBER 30 SEPTEMBER 30
1998 1997
----------- ----------
Reconciliation of net income to net cash provided by
operating activities
<S> <C> <C>
Net income $ 4,774 $ 4,213
----------- ----------
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 412 382
Provision for loan losses 1,012 560
(Gain) Loss on sale of equipment 0 (4)
Realized Gains on available for sale securities 0 0
Decrease in taxes payable (61) (9)
Increase in interest receivable (243) (188)
Increase (Decrease) in interest payable 113 (97)
Increase in prepaid expenses (117) (262)
Increase in accrued expenses 536 664
Amortization and accretion 30 92
Increase (Decrease) in deferred interest (8) 4
Increase in fees receivable (14) (12)
----------- ----------
Total Adjustments $ 1,660 $ 1,130
----------- ----------
Net cash provided by operating activities $ 6,434 $ 5,343
=========== ==========
Supplemental schedule of non-cash investing activities:
Other real estate acquired in settlement of loans 0 258
</TABLE>
The accompanying notes are an integral part of these statements
7
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1998
(IN THOUSANDS OF DOLLARS)
<CAPTION>
Accumulated
other
Comprehensive Comprehensive Retained
Common Stock Surplus Income Income Earnings
------------ ------- ------ ------ --------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1996 10,000 13,554 (91) 14,111
Comprehensive Income:
Net Income 4,213 4,213
Other Comprehensive Income:
Net of Tax
Unrealized loss on
available for sale
securities 159 159
----------
Total comprehensive
income 4,372
==========
Cash Dividends (1,620)
---------- ---------- ---------- ----------
Balances, September 30, 1997 10,000 13,554 68 16,704
========== ========== ========== ==========
<CAPTION>
Accumulated
other
Comprehensive Comprehensive Retained
Common Stock Surplus Income Income Earnings
------------ ------- ------ ------ --------
Balances, December 31, 1997 20,000 13,554 155 7,626
Comprehensive Income:
Net Income 4,774 4,774
Other Comprehensive Income:
Net of Tax
Unrealized loss on
available for sale
securities 592 592
----------
Total comprehensive
income 5,366
==========
Cash Dividends (1,800)
---------- ---------- ---------- ----------
Balances, September 30, 1998 20,000 13,554 747 10,600
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
8
<PAGE>
VIRGINIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and, therefore,
do not include all of the disclosures and notes required by generally accepted
accounting principles. In the opinion of Virginia Financial Corporation's
management, all adjustments, consisting of normal recurring accruals, necessary
to present fairly the financial position as of September 30, 1998, the results
of operations for the three and nine months ended September 30, 1998 and 1997,
and cash flows for the nine months ended September 30, 1998 and 1997 have been
made. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Virginia
Financial Corporation Annual Report and Form 10-K for the year ended December
31, 1997.
The consolidated financial statements include the accounts of the
Company and its subsidiary, with all significant intercompany transactions being
eliminated in consolidation.
Note 2. Securities as of September 30, 1998 and December 31, 1997 are
summarized below.
<TABLE>
<CAPTION>
(000 Omitted)
September 30, 1998 December 31, 1997
Unrealized Unrealized
Book Market Gain (Loss) Book Market Gain (Loss)
---- ------ ----------- ---- ------ -----------
Securities Available for Sale
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Securities $11,630 $11,800 $170 $13,025 $13,130 $105
U.S. Agency Securities 53,663 54,444 781 42,899 43,029 130
Obligations of State and
Political Subdivisions 6,949 7,130 181 0 0 0
Other Securities 5,028 5,028 0 0 0 0
----------- ---------- ---------- --------- --------- ----------
Total Securities Available for Sale $ 77,270 $ 78,402 $ 1,132 $55,924 $56,159 $235
Securities Held to Maturity
U.S. Agency Securities $24,680 $24,824 $144 $39,660 $39,604 ($56)
Obligations of State and
Political Subdivisions 19,494 19,927 433 17,590 17,762 172
----------- ---------- ---------- --------- --------- ----------
Total Securities Held to Maturity $44,174 $44,751 $577 $57,250 $57,366 $116
</TABLE>
9
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. The consolidated loan portfolio, stated at face amount, is composed of
the following:
<CAPTION>
(000 Omitted)
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
Real Estate Loans:
Construction and Land Development $18,238 $20,183
Secured by Farm Land 1,204 1,316
Secured by 1-4 Family residential 113,987 128,130
Other Real Estate Loans 53,593 39,037
Loans to Farmers (Except Those Secured by Real Estate) 2,616 2,725
Commercial and Industrial Loans
(Except Those Secured by Real Estate) 36,895 34,434
Loans to Individuals for Personal Expenditures 43,315 43,364
All Other Loans 408 799
------------ ------------
Total Loans $270,256 $269,988
Less Unearned Income Reflected in Loans 373 406
------------ ------------
Loans, Net of Unearned Income $269,883 $269,582
============ ============
The Bank had loans in a Nonaccrual category of $813 on December 31, 1997 and
$1,480 on September 30, 1998.
Note 4. Allowance for Loan Losses
Analysis of the Allowance for Loan Losses
<CAPTION>
(000 Omitted)
For the Nine Months Ended
September 30, 1998 September 30, 1997
------------------ ------------------
Balance at Beginning of Period 3,753 3,039
Charge-Offs (1,670) (122)
Recoveries 43 28
------------ ------------
Net Charge-Offs (1,627) (94)
Provision for Loan Losses 1,012 560
------------ ------------
Balance at End of Period 3,138 3,505
============ ============
</TABLE>
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 the third quarter of 1998 was $1,466,000 compared to
$1,303,000 the third quarter of 1997. This represents an increase of $163,000 or
12.51%. Net income for the first nine months of 1998 was $4,774,000 compared to
$4,213,000 the first nine months of 1997. This represents an increase of
$561,000 or 13.32%. Net interest income increased by $368,000 or 9.45% for the
third quarter of 1998 compared to the third quarter of 1997. The first nine
months of 1998 net interest income increased by $975,000 or 8.37% compared to
1997. The net interest spread was 3.53% for the first nine months of 1998
compared to 3.52% for the first nine months of 1997. Non-interest income
increased $656,000 or 29.66% in 1998 compared to 1997. Increases were
experienced in fiduciary income, service charges on deposit accounts and in
other fees and non-interest income. Comparing the third quarter of 1998 to 1997
increases were experienced in these same accounts. These increases were
primarily from secondary mortgage activity and service charges on deposit
accounts. Non-interest expenses increased the first nine months of 1998 by
$352,000 or 4.92% compared to 1997. The third quarter non-interest expense
increased by $63,000 or 2.55% compared to the third quarter of 1997. The
provision for loan losses for the first nine months of 1998 compared to 1997
increased by $452,000 or 80.71%. The provision for loan losses increased the
third quarter of 1998 compared to 1997 by $357,000 or 144.53%. This increase in
the provision for loan losses was necessary due to problems identified in a
group of interrelated credits in one loan officers loan portfolio.
Financial Condition
Total assets increased the first nine months of 1998 by $15,242,000 or
3.77% compared to an increase of $26,886,000 or 7.13% for the first nine months
of 1997. Total assets increased the third quarter of 1998 by $6,652,000 or
1.61%. Deposit growth the first nine months of 1998 was $10,550,000 or 3.00%.
Repurchase agreements increased by $5,096,000. This growth funded an increase in
the investment portfolio of $9,167,000 and $916,000 in the loan portfolio. Also
at quarter end, Federal Funds sold were $3,200,000. Loan growth during 1998 has
been modest due to the lower interest rates being offered in the market place,
and most noticeably, lower rates being offered by the fixed rate secondary
mortgage market. Deposit growth continues to be primarily in the area of time
deposits.
Future Operations
Effective October 1, 1998, the Bank opened an office at 375 North Mason
Street in Harrisonburg, Virginia. This office provides a full range of banking
services to the Harrisonburg area. Also, the Bank began construction of a 3,600
square foot office at 100 Lucy Lane in Waynesboro, Virginia. The Lucy Lane
office is expected to be open for business in March, 1999. During the fourth
quarter of 1998, the Bank will begin construction of a 3,600 square foot office
to be located at 1197 North Lee Highway in Lexington, Virginia. The completion
date for the Lexington office is expected to be May, 1999. These expansions will
give Planters Bank a presence in the Harrisonburg and Lexington, Virginia
markets. The Waynesboro office will relieve the over flow at the present
Waynesboro locations, in addition to serving the Southern portion of Waynesboro.
11
<PAGE>
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 post retirement benefit plans. It
does not change the measurement or recognition of those plans. This statement
standardizes the disclosure requirements for pensions and other post retirement
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. 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 on 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 standard 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.
Year 2000 Matters
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.
Additionally, many of the Bank's security systems, such as vaults,
alarms and other functional equipment, have been identified as potential sources
of Year 2000 problems and are in the process of being tested with the help of
the manufacturers to confirm Year 2000 compliance.
The Company's total cost of achieving Year 2000 compliance is not
expected to exceed $50,000, excluding normal hardware and software upgrades and
replacements. The costs 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 were derived utilizing numerous assumptions of future events
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those plans. Specific factors that might cause such material differences
include, but are not limited to, the availability of personnel trained in this
area, the availability of third party vendors to correct their software and
hardware, the ability of significant customers to remedy their Year 2000 issues,
and similar uncertainties.
12
<PAGE>
While the Company believes that it is taking the necessary steps to
resolve its Year 2000 issues in a timely manner, there can be no assurance that
there will be no Year 2000 problems. If any such problems occur, the Company
will work to solve them as quickly as possible. At present, the Company does not
expect that any such problems will have a material adverse effect on its
business.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes from the quantitative and
qualitative disclosures about market risk made in the December 31, 1997 Form
10-K.
13
<PAGE>
<TABLE>
VIRGINIA FINANCIAL CORPORATION
AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
<CAPTION>
(000 Omitted)
Nine Months Ended September 30
1998 1997
Average Income/ Yield/ Average Income/ Yield/
ASSETS Balance Expense Rate Balance Expense Rate
----------- --------- ---------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Securities:
Taxable $ 96,348 $ 4,330 5.99% $ 100,501 $ 4,484 5.95%
Tax-exempt (1) 18,172 929 6.82% 15,808 798 6.73%
----------- --------- ---------- ----------- --------- --------
Total Securities 114,520 5,259 6.12% 116,309 5,282 6.06%
Loans (net of earned income):
Taxable 268,304 18,029 8.96% 243,689 16,313 8.93%
Tax-Exempt (1) 287 13 6.04% 497 23 6.17%
----------- --------- ---------- ----------- --------- --------
Total Loans 268,591 18,042 8.96% 244,186 16,336 8.92%
Fed Funds Sold and Repurchase Agreements 6,386 263 5.49% 2,530 105 5.53%
----------- --------- ---------- ----------- --------- --------
Total Earning Assets 389,497 23,564 8.07% 363,025 21,723 7.98%
Less Allowance for Loan Losses (3,138) (3,217)
Total Nonearning Assets 26,201 23,645
----------- -----------
Total Assets $412,560 $383,453
=========== ===========
LIABILITIES AND SHAREHOLDER EQUITY
Interest bearing deposits:
NOW Accounts $42,286 $879 2.77% $39,677 $828 2.78%
Money Market Savings 58,856 1,708 3.87% 56,957 1,628 3.81%
Regular Savings 34,995 778 2.96% 35,891 798 2.96%
Certificates of Deposit:
Less than $100,000 146,759 6,015 5.46% 132,980 5,393 5.41%
$100,000 and More 22,228 960 5.76% 21,413 907 5.65%
----------- --------- ---------- ----------- --------- --------
Total Interest Bearing Deposits 305,124 10,340 4.52% 286,918 9,554 4.44%
Fed Funds Purchased 213 9 5.63% 1,115 47 5.62%
Short Term Borrowings 6,913 277 5.34% 5,130 201 5.22%
----------- --------- ---------- ----------- --------- --------
Total Interest Bearing Liabilities 312,250 10,626 4.54% 293,163 9,802 4.46%
Noninterest Bearing Liabilities
Demand Deposits 54,971 49,052
Other Liabilities 2,297 2,010
----------- -----------
Total Liabilities 369,518 344,225
Stockholders' Equity 43,042 39,228
----------- -----------
Total Liabilities and Stockholders' Equity 412,560 383,453
Net Interest Income 12,618 11,643
Interest Rate Spread 3.53% 3.52%
Interest Expense as a Percent of Average
Earning Assets 3.64% 3.60%
Net Interest Margin 4.43% 4.38%
</TABLE>
(1)Income and yields are reported on a taxable-equivalent basis assuming a
federal tax rate of 34% in 1997 and 1998
14
<PAGE>
VIRGINIA FINANCIAL CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As of September 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
Not Applicable
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 November 12, 1998 /s/ Fred D.Bowers
----------------- ---------------------------------------
Fred D. Bowers, Secretary/Treasurer
(Principal Accounting Officer and Duly
Authorized Officer)
15
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,925
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 78,402
<INVESTMENTS-CARRYING> 44,174
<INVESTMENTS-MARKET> 0
<LOANS> 269,883
<ALLOWANCE> 3,138
<TOTAL-ASSETS> 419,241
<DEPOSITS> 362,717
<SHORT-TERM> 10,056
<LIABILITIES-OTHER> 1,567
<LONG-TERM> 0
0
0
<COMMON> 20,000
<OTHER-SE> 24,901
<TOTAL-LIABILITIES-AND-EQUITY> 419,241
<INTEREST-LOAN> 18,037
<INTEREST-INVEST> 4,943
<INTEREST-OTHER> 264
<INTEREST-TOTAL> 23,244
<INTEREST-DEPOSIT> 10,340
<INTEREST-EXPENSE> 10,626
<INTEREST-INCOME-NET> 12,618
<LOAN-LOSSES> 1,012
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,512
<INCOME-PRETAX> 6,962
<INCOME-PRE-EXTRAORDINARY> 6,962
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,774
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
<YIELD-ACTUAL> 8.07
<LOANS-NON> 1,321
<LOANS-PAST> 315
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,753
<CHARGE-OFFS> 1,670
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 3,138
<ALLOWANCE-DOMESTIC> 2,523
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 615
</TABLE>
|
|