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, 2000
[ ] Transition Report Under Section 13
or 15(d) of the Exchange Act
For the Transition period ended________________
COMMISSION FILE NUMBER 0-26551
CATAWBA VALLEY BANCSHARES, INC.
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NORTH CAROLINA 56-2137427
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1039 SECOND STREET NE, HICKORY, NC 28601
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(828) 431-2300
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 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 [ ]
As of April 30, 2000, 1,495,351 shares of the Registrant common stock, $1.00 par
value, were outstanding. The Registrant has no other classes of securities
outstanding.
This report contains 9 pages.
<PAGE>
Page No.
PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Financial Condition
March 31, 2000 and December 31, 1999 ..........................3
Consolidated Statements of Operations
Three Months Ended March 31, 2000 and 1999 ...................4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999 ....................5
Notes to Consolidated Financial Statements ....................6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ....................................7
PART II. OTHER INFORMATION .................................................8
Item 6. Exhibits and Reports on Form 8-K .....................8
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<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CATAWBA VALLEY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
<S> <C> <C>
MARCH 31, DECEMBER 31,
2000 1999
------------- -------------
(Unaudited) (1)
ASSETS
Cash and due from banks $ 1,388,745 $ 5,213,121
Interest bearing deposits in banks 4,277,427 3,026,931
Federal funds sold 1,197,256 1,497,543
Time deposits in banks 1,386,968 2,277,968
Securities available for sale 17,581,407 15,755,543
Securities held to maturity,market value of
$3,277,700 in 2000 and $ 1,607,909 in 1999 3,323,133 1,650,946
Loans 91,726,652 83,658,838
Less allowance for loan losses (1,386,342) (1,341,340)
------------- -------------
Net loans 90,340,310 82,317,498
Federal Home Loan Bank 297,600 271,000
Bank premises and equipment 3,011,283 2,801,766
Other assets 3,437,238 3,426,049
------------- -------------
Total assets $ 126,241,367 $ 118,238,365
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest-bearing demand $ 7,580,280 $ 7,021,108
Money market and NOW accounts 31,918,220 30,665,088
Savings 1,994,102 1,821,626
Time , $100,000 and over 20,452,990 17,648,470
Other time 43,659,563 40,824,592
------------- -------------
Total deposits 105,605,155 97,980,884
Borrowings 5,000,000 5,000,000
Accrued expenses and other liabilities 317,723 236,710
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Total liabilities 110,922,878 103,217,594
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Stockholders' equity
Preferred stock, no par value, 1,000,000 shares
authorized, none issed - -
Common stock, $1 par value, 9,000,000 shares
authorized, 1,495,351 shares issued and outstanding 1,495,351 1,495,351
Additional paid-in capital 13,602,333 13,602,333
Retained earnings 615,387 301,140
Accumulated other comprehensive loss (394,582) (378,053)
------------- -------------
Total stockholders' equity 15,318,489 15,020,771
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Total liabilities and stockholders' equity $ 126,241,367 $ 118,238,365
============= =============
</TABLE>
(1) Derived from audited financial statements
See accompanying notes
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<PAGE>
CATAWBA VALLEY BANCSHARES, INC.
COMSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
2000 1999
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Interest and fee income
Loans $2,056,085 1,461,991
Investment securities 323,659 178,925
Federal funds sold 11,464 23,321
Time deposits 23,236 34,091
Interest-bearing deposits with banks 45,361 43,295
---------- ----------
Total interest income 2,459,805 1,741,623
---------- ----------
Interest expense:
Time deposits, $100,000 and over 281,604 198,073
Other deposits 948,570 683,826
Borrowings 77,856 0
---------- ----------
Total interest expense 1,308,030 881,899
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Net interest income 1,151,775 859,724
Provision for loan losses 86,972 99,263
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Net interest income after provision for loan losses 1,064,803 760,461
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Non-interest income:
Service charges on deposit accounts 93,178 59,408
Other 119,107 141,431
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Total non-interest income 212,285 200,839
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Non-interest expenses
Compensation and employee benefits 401,204 297,834
Occupancy and equipment 125,181 75,875
Professional Fees 25,835 33,496
Stationery, printing and supplies 24,680 19,096
Advertising and business promotion 33,797 32,957
Data processing 85,556 61,085
Other 95,743 82,013
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Total non-interest expense 791,996 602,356
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Income before income taxes 485,092 358,944
Income taxes 170,845 131,786
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Net income $ 314,247 $ 227,158
========== ==========
Net income per common share
Basic $ 0.21 $ 0.15
Diluted $ 0.20 $ 0.14
========== ==========
See accompanying notes
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<PAGE>
CATAWBA VALLEY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
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Cash flows from operating activities:
<S> <C> <C>
Net income $ 314,247 $ 227,158
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation & amortization 59,487 37,175
Provision for loan losses 86,972 99,263
(Increase)decrease in other assets (11,189) 554,762
Increase(decrease) in other liabilities 81,013 (241,428)
------------ ------------
Net cash provided by (used in) operating activities 530,530 676,930
------------ ------------
Cash flows from investing activities:
(Increase)decrease in time deposits with other financial institutions 891,000 978
Purchase of securities available for sale (2,170,128) (2,076,200)
Purchase of securities held to maturity (1,698,901) (360,000)
Purchase of Federal Home Loan Bank stock (26,600) 0
Collections and maturities of securities available for sale 228,084 928,563
Collections and maturities of securities held to maturity 24,908 28,222
Net increase in loans (8,067,814) (6,901,215)
Purchases or premises and equipment (209,517) (453,789)
------------ ------------
Net cash used in investing activities (11,028,968) (8,833,441)
------------ ------------
Cash flows from financing activities:
Net increase in deposit accounts 7,624,271 6,840,163
------------ ------------
Net increase(decrease) in cash and cash equivalents (2,874,167) (1,316,348)
Cash and cash equivalents, beginning of period 9,737,595 11,595,786
------------ ------------
Cash and cash equivalents, end of period $ 6,863,428 $ 10,279,438
============ ============
</TABLE>
See accompanying notes
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<PAGE>
CATAWBA VALLEY BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A - BASIS OF PRESENTATION
In management's opinion, the Financial Information, which is unaudited, reflects
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the Financial information as of and for the three
month periods ended March 31, 2000 and 1999, in conformity with generally
accepted accounting principles. The Financial Statements include the accounts of
Catawba Valley Bancshares, Inc. (the "Company") and it's wholly-owned
subsidiary, Catawba Valley Bank, (the "Bank"). Operating results for the
three-month period ended March 31, 2000 are not necessarily indicative of the
results that maybe expected for the fiscal year ending December 31, 2000.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the Financial
Statements filed as part of the Company's 1999 annual report on Form 10-KSB.
This quarterly report should be read in conjunction with such annual report.
NOTE B - EARNINGS PER SHARE
Basic and diluted net income per share is computed based on the weighted
average, number of shares outstanding during each period after retroactively
adjusting for the stock dividends. Diluted net income per share reflects the
potential direction that could occur if securities or other were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the net income of the Bank.
Basic and diluted net income per share have been computed based upon net income
as presented in the accompanying consolidated statements of operations divided
by the weighted average number of common shares outstanding or assumed to be
outstanding as summarized below.
THREE MONTHS ENDED
MARCH 31
2000 1999
--------- ---------
Weighted average number of common
shares used in computing basic net income
per share 1,495,351 1,487,101
Effect of dilutive stock options 90,227 125,347
--------- ---------
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<PAGE>
Weighted average number of common shares
and dilutive potential common shares used in
computing dilutied net income per share 1,585,578 1,612,448
--------- ---------
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND DECEMBER 31, 1999
During the three months ended March 31, 2000, total assets increased $8.0
million or 6.7% from $118.2 million to $126.2 million. Total loans outstanding
increased $8.1 million or 9.6% for the same period. The growth in these areas
was funded by a $7.6 million or 7.8% increase in deposits.
The Bank operates three full service branches, and actively solicits loans and
deposits.
Total stockholders' equity increased $297,718 for the three-month period ended
March 31, 2000. The increase resulted principally from net income of $314,247
for the three months. At March 31, 2000 the Bank continued to exceed all
applicable regulatory capital requirements.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND 1999.
Net Income. Net income for the quarter ended March 31, 2000 was $314,247 or $.21
per share, as compared with net income of $227,158 or $.15 per share for the
three months ended March 31, 1999, an increase of $87,089 or $.06 per share.
Increases in net interest income and non-interest income for the quarter ended
March 31, 2000 of $292,051 and $11,446, respectively were offset by an increase
in non-interest expenses of $189,640.
Net Interest Income. Net interest income for the quarter ended March 31, 2000
was $1,151,775 as compared with $859,724 during the quarter ended March 31,
1999, an increase of $292,051 that resulted principally from an increased level
of interest earning assets during the current quarter. Average interest earning
assets were approximately $25.5 million higher during the quarter ended March
31, 2000 as compared with the quarter ended March 31, 1999.
Provision for Loan Losses. The provision for loan losses was $86,972 and $99,263
for the quarters ended March 31, 2000 and 1999 respectively. There were net loan
charge offs of $41,967 during the quarter ended March 31, 2000 as compared with
the net recoveries of $9,331 during the quarter ended March 31, 1999. At March
31, 2000, non- accrual loans aggregated $206,872.
-7-
<PAGE>
Non Interest Income. Non interest income was $212,285 for the quarter ended
March 31, 2000 compared to $200,839 for the quarter ended March 31, 1999, an
increase of $11,446. This increase resulted principally from an increase of
$33,770 in service charges on deposit accounts that was offset by a decrease in
other non-interest income of $22,324.
Non Interest Expense. Non interest expense increased to $791,996 during the
quarter ended March 31, 2000 as compared to $602,356 for the quarter ended March
31, 1999, an increase of $189,640. The primary factor contributing to this
increase was an increase of $152,676 in compensation and occupancy expenses
during the current quarter that was attributable to the fact that the Bank
opened it's third full service branch late in the First Quarter of 1999.
LIQUIDITY AND CAPITAL RESOURCES
The objective of the Company's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses the
Bank's ability to meet deposit withdrawals on demand or at contractual maturity,
and to fund new loans and investments as opportunities arise.
The primary sources of internally generated funds are principal and interest
payments on loans receivable, cash flows generated from operations and
repayments of mortgage backed securities. External sources of funds include
increases in deposits and advances from the Federal Home Loan Bank of Atlanta.
At March 31, 2000, liquid assets comprised 21.4 % of total assets. Management
believes that it will have sufficient funds available to meet it anticipated
future loan commitments as well as other liquidity needs.
At March 31, 2000 the Bank exceeded all applicable Regulatory Capital
requirements
PART II OTHER INFORMATION:
A) Exhibits
(27) Financial Data Schedule
B) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 2000.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf. By the undersigned , there onto duly
authorized.
CATAWBA VALLEY
BANCSHARES, INC
Date: May 12, 2000 By: /s/ R. Steve Aaron
-------------------------------------
R. Steve Aaron
President and Chief Executive Officer
Date: May 12, 2000 By: /s/ G. Marvin Lowder
-------------------------------------
G. Marvin Lowder
Chief Financial Officer
-9-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,389
<INT-BEARING-DEPOSITS> 4,277
<FED-FUNDS-SOLD> 1,197
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 17,581
<INVESTMENTS-CARRYING> 3,323
<INVESTMENTS-MARKET> 3,278
<LOANS> 91,727
<ALLOWANCE> (1,386)
<TOTAL-ASSETS> 126,241
<DEPOSITS> 105,605
<SHORT-TERM> 5,000
<LIABILITIES-OTHER> 318
<LONG-TERM> 0
0
0
<COMMON> 1,495
<OTHER-SE> 13,823
<TOTAL-LIABILITIES-AND-EQUITY> 126,241
<INTEREST-LOAN> 2,056
<INTEREST-INVEST> 324
<INTEREST-OTHER> 80
<INTEREST-TOTAL> 2,460
<INTEREST-DEPOSIT> 1,230
<INTEREST-EXPENSE> 78
<INTEREST-INCOME-NET> 1,152
<LOAN-LOSSES> 87
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 792
<INCOME-PRETAX> 485
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 314
<EPS-BASIC> .21
<EPS-DILUTED> .20
<YIELD-ACTUAL> 0
<LOANS-NON> 207
<LOANS-PAST> 442
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 723
<ALLOWANCE-OPEN> 1,341
<CHARGE-OFFS> 43
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 1,386
<ALLOWANCE-DOMESTIC> 1,386
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
