FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 010042
One Valley Bancorp of West Virginia, Inc.
(Exact name of registrant as specified in its charter)
West Virginia 55-0609408
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Valley Square, Charleston, West Virginia 25326
(Address of principal executive offices)
(Zip Code)
(304) 348-7000
(Registrant's telephone number, including area code)
Not applicable
(Former name, address, and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities and 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 XXX No
The number of shares outstanding of each of the issuer's classes of common stock
as of June 30, 1995 was:
Common Stock, $10.00 par value -- 17,299,857 shares
<PAGE>
One Valley Bancorp of West Virginia, Inc.
Part I. Financial Information
Item 1. Financial Statements.
The unaudited interim consolidated financial statements of One Valley
Bancorp of West Virginia, Inc. (One Valley) or (Registrant) are included on
pages 3 - 7 of this report.
These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for annual year-end
financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included and are of a
normal recurring nature. Operating results for the six month period ended
June 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. For further information,
refer to the consolidated financial statements and footnotes thereto
included in the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's discussion and analysis of financial condition and results of
operations is included on pages 8 - 16 of this report.
<PAGE>
<TABLE>
ONE VALLEY BANCORP OF WEST VIRGINIA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited in thousands)
<CAPTION>
June 30 December 31 June 30
1995 1994 1994
<S> <C> <C> <C>
Assets
Cash and Due From Banks $144,337 $178,900 $129,555
Interest Bearing Deposits With Other Banks 8,485 4,297 3,518
Federal Funds Sold 16,700 24,875 2,400
---------- ---------- ----------
Cash and Cash Equivalents 169,522 208,072 135,473
Securities
Available-for-Sale, at fair value 544,570 541,201 615,737
Held-to-Maturity (Estimated Fair Value,
June 30, 1995 - $469,125; December 31, 1994 - $422,381;
June 30, 1994 - $452,522) 465,004 445,158 462,665
Loans
Total Loans 2,438,786 2,372,957 2,241,449
Less: Allowance For Loan Losses 38,642 37,438 37,572
---------- ---------- ----------
Net Loans 2,400,144 2,335,519 2,203,877
Bank Premises & Equipment - Net 81,618 82,853 82,230
Other Assets 63,033 60,438 55,713
---------- ---------- ----------
Total Assets $3,723,891 $3,673,241 $3,555,695
========== ========== ==========
Liabilities and Shareholders' Equity
Deposits
Non-interest Bearing $383,441 $378,512 $420,409
Interest Bearing 2,636,778 2,547,967 2,497,750
---------- ---------- ----------
Total Deposits 3,020,219 2,926,479 2,918,159
Short-term Borrowings
Federal Funds Purchased 48,639 53,145 34,638
Repurchase Agreements and Other Borrowings 255,239 322,194 238,286
---------- ---------- ----------
Total Short-term Borrowings 303,878 375,339 272,924
Long-term Borrowings 11,440 19,450 27,477
Other Liabilities 34,636 30,106 23,299
---------- ---------- ----------
Total Liabilities 3,370,173 3,351,374 3,241,859
Shareholders' Equity:
Preferred Stock-$10 par value; 1,000,000 shares authorized
but none issued 0 0 0
Common Stock-$10 par value; 40,000,000 shares authorized,
Issued 17,980,357 shares at June 30, 1995;
17,538,368 shares at December 31, 1994;
17,528,658 shares at June 30, 1994; 179,804 175,384 175,287
Capital Surplus 34,244 25,954 25,915
Retained Earnings 152,323 137,437 122,624
Unrealized Gain (Loss) on Securities Available-for-Sale,
net of deferred taxes; 2,154 (6,535) (2,929)
Treasury Stock - 680,500 shares at June 30, 1995,
533,500 shares at December 31, 1994;
418,000 shares at June 30, 1994; at cost (14,807) (10,373) (7,061)
---------- ---------- ----------
Total Shareholders' Equity 353,718 321,867 313,836
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $3,723,891 $3,673,241 $3,555,695
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP OF WEST VIRGINIA, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited in thousands, except per share data)
<CAPTION>
For The Three Months For The Six Months
Ended June 30 Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Interest Income
Interest and Fees on Loans
Taxable $53,990 $45,776 $106,020 $90,147
Tax-Exempt 626 553 1,254 1,125
-------- -------- -------- --------
Total 54,616 46,329 107,274 91,272
Interest on Investment Securities
Taxable 12,701 11,974 24,641 24,657
Tax-Exempt 2,502 2,841 5,006 4,997
-------- -------- -------- --------
Total 15,203 14,815 29,647 29,654
Other Interest Income 923 150 1,123 494
-------- -------- -------- --------
Total Interest Income 70,742 61,294 138,044 121,420
Interest Expense
Deposits 27,039 20,693 51,530 41,410
Short-term Borrowings 3,198 1,432 6,476 2,821
Long-term Borrowings 185 289 411 534
-------- -------- -------- --------
Total Interest Expense 30,422 22,414 58,417 44,765
-------- -------- -------- --------
Net Interest Income 40,320 38,880 79,627 76,655
Provision For Loan Losses 1,113 1,213 2,226 2,392
-------- -------- -------- --------
Net Interest Income
After Provision For Loan Losses 39,207 37,667 77,401 74,263
Other Income
Trust Department Income 2,123 2,065 4,027 4,077
Service Charges on Deposit Accounts 3,568 2,977 6,734 5,586
Real Estate Loan Processing & Servicing Fees 1,164 1,310 2,279 2,728
Other Service Charges and Fees 1,300 1,126 2,385 2,276
Other Operating Income 1,811 3,333 3,598 5,043
Securities Transactions 13 (504) 20 (307)
-------- -------- -------- --------
Total Other Income 9,979 10,307 19,043 19,403
Other Expenses
Salaries and Employee Benefits 15,438 15,863 31,881 31,791
Occupancy Expense - Net 1,572 1,393 3,100 2,954
Equipment Expenses 2,263 2,071 4,407 4,129
Federal Deposit Insurance 1,678 1,662 3,336 3,323
Outside Data Processing 1,147 1,333 2,216 2,241
Other Operating Expenses 8,654 7,750 16,437 15,238
-------- -------- -------- --------
Total Other Expenses 30,752 30,072 61,377 59,676
-------- -------- -------- --------
Income Before Taxes 18,434 17,902 35,067 33,990
Applicable Income Taxes 6,137 5,853 11,481 11,110
-------- -------- -------- --------
Net Income $12,297 $12,049 $23,586 $22,880
======== ======== ======== ========
Net Income Per Common Share $0.71 $0.70 $1.37 $1.33
======== ======== ======== ========
Based on Average Shares Outstanding of 17,354 17,165 17,217 17,207
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP OF WEST VIRGINIA, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(unaudited in thousands)
<CAPTION>
Unrealized
Gain (Loss)
on Securities
Common Capital Retained Treasury Available
Stock Surplus Earnings Stock for Sale
<S> <C> <C> <C> <C> <C>
Balance December 31, 1994 $175,384 $25,954 $137,437 ($10,373) ($6,535)
Stock Issued for Acquisition 4,116 8,130 0 0 0
Three Months Ended June 30, 1995
Net Income 0 0 23,586 0 0
Cash Dividends ($.50 per share) 0 0 (8,700) 0 0
Change in Fair Value of Securities
Available for Sale, net of deferred taxes 0 0 0 0 8,689
Treasury Shares Purchased 0 0 0 (4,434) 0
Stock Options Exercised 304 160 0 0 0
-------- -------- -------- -------- --------
Balance June 30, 1995 $179,804 $34,244 $152,323 ($14,807) $2,154
======== ======== ======== ======== ========
Balance December 31, 1993 $175,168 $25,830 $107,314 ($3,129) $0
Effect of adopting FAS 115 0 0 0 0 4,765
Six Months Ended June 30, 1994
Net Income 0 0 22,880 0 0
Cash Dividends ($.44 per share) 0 0 (7,570) 0 0
Change in Fair Value of Securities 0 0 0 0 0
Available for Sale, net of deferred taxes 0 0 0 0 (7,694)
Treasury Shares Purchased 0 0 0 (3,932) 0
Stock Options Exercised 119 85 0 0 0
-------- -------- -------- -------- --------
Balance June 30, 1994 $175,287 $25,915 $122,624 ($7,061) ($2,929)
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP OF WEST VIRGINIA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited in thousands)
<CAPTION>
For The Six Months
Ended June 30
1995 1994
<S> <C> <C>
Operating Activities
Net Income $23,586 $22,880
Adjustments To Reconcile Net Income To Net Cash
Provided by Operating Activities:
Provision For Loan Losses 2,226 2,392
Depreciation 4,021 3,647
Amortization and Accretion 1,659 1,074
Net (Gain) Loss From Sales of Assets (20) 307
Increase (Decrease) Due to Changes In:
Accrued Interest Receivable (2,870) (385)
Accrued Interest Payable 2,312 (361)
Other Assets and Other Liabilities (454) (1,264)
-------- --------
Net Cash Provided by Operating Activities 30,460 28,290
Investing Activities
Proceeds From Sales of Securities Available for Sale 55,625 70,497
Proceeds From Maturities of Securities Available for Sale 140,917 134,655
Proceeds From Maturities of Securities Held to Maturity 14,409 35,524
Purchases of Securities Available for Sale (152,337) (183,034)
Purchases of Securities Held to Maturity (34,702) (84,075)
Net Increase In Loans (54,127) (70,427)
Acquisition of Subsidiary, Net of Cash Paid 4,454 0
Purchases of Premises and Equipment (2,203) (5,644)
-------- --------
Net Cash Used in Investing Activities (27,964) (102,504)
Financing Activities
Net Change in Interest Bearing and Non-interest Bearing Deposits 51,595 (18,576)
Net (Decrease) Increase in Federal Funds Purchased (4,506) 20,626
Net (Decrease) Increase in Other Short-term Borrowings (66,955) 33,878
Proceeds From Long-term Borrowings 0 14,699
Repayment of Long-term Debt (8,510) (10,010)
Proceeds From Issuance of Common Stock 464 204
Acquisition of Treasury Stock (4,434) (3,932)
Dividends Paid (8,700) (7,570)
-------- --------
Net Cash (Used in) Provided by Financing Activities (41,046) 29,319
-------- --------
Decrease in Cash and Cash Equivalents (38,550) (44,895)
Cash And Cash Equivalents at Beginning of Year 208,072 180,368
-------- --------
Cash And Cash Equivalents, June 30 $169,522 $135,473
======== ========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accounting and reporting policies of One Valley conform to generally
accepted accounting principles and practices in the banking industry. All
significant intercompany accounts and transactions have been eliminated in
consolidation. The interim financial information included in this report is
unaudited. In the opinion of management, all adjustments necessary for a
fair presentation of the results of the interim periods have been made.
These notes are presented in conjunction with the Notes to Consolidated
Financial Statements included in the Annual Report of One Valley.
Note B - Accounting Change
Effective January 1, 1995, One Valley adopted the provisions of FASB
Statement 114, "Accounting by Creditors for Impairment of a Loan" as amended
by FASB Statement 118. Under Statement 114 a loan is impaired when, based
on current information and events, it is probable that One Valley will be
unable to collect all amounts due according to the contractual terms of a
loan agreement. The effect of adopting this Statement was immaterial to One
Valley's financial statements.
Note C - Acquisitions
At the close of business on March 15, 1995, One Valley acquired all of the
outstanding stock of Point Bancorp, Inc., the parent company of a $57
million Federal Savings Bank located in Point Pleasant, WV. Pursuant to the
merger agreement, One Valley exchanged 0.6 shares of its common stock and
$7.10 cash for each share of Point Bancorp common stock. A total of 411,602
shares were issued in this transaction. This combination was accounted for
under the purchase method of accounting. Accordingly, consolidated results
include the operations of Point Bancorp only from the date of acquisition.
<PAGE>
One Valley Bancorp of West Virginia, Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
June 30, 1995
INTRODUCTION AND SUMMARY
Net income for the second quarter of 1995 totaled $12.3 million, an
increase of 2.1% over the $12.0 million earned in the same quarter of 1994.
On a per share basis, net income of $0.71 for the second quarter of 1995
increased 1.4% over the $0.70 earned during the same period in 1994. The
improvement in earnings during the quarter can be attributed, in large part,
to an increase in net interest income and a decrease in the provision for
loan losses.
Net income for the first six months of 1995 totaled $23.6 million, a
3.1% increase over the first six months of 1994. Earnings per share during
the six month period were $1.37, up 3.0% over the $1.33 earned in the first
six months of 1994.
Return on average assets (ROA) measures how effectively One Valley
utilizes its assets to produce net income. ROA was 1.29% in the first six
months of 1995, a slight decrease from the 1.30% earned during the first six
months of 1994. Return on average equity (ROE) also decreased, from 14.62%
for the first six months of 1994 to 13.93% earned over the first six months
of 1995.
The following discussion is an analysis of the financial condition and
results of operations of One Valley for the first six months of 1995. This
discussion should be read in conjunction with the 1994 Annual Report to
Shareholders and the other financial information included in this report.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income for the six months ended June 30, 1995, was $83.0
million on a fully tax-equivalent basis, a 3.8% increase from the $80.0
million earned during the same period in 1994. This increase is largely due
to a $222.0 million, or 10.2% increase in average total loans during the
first six months comparison. Average earning assets increased by 4.1% in
the first six months of 1995 over the same period in 1994, while average
interest bearing liabilities increased by 5.2% in the same comparison. Both
total interest income and total interest expense increased from the prior
year due to the increases in volume and the rising interest rate
environment. However, since the growth in loans, One Valley's highest
yielding asset, outpaced the growth in average interest bearing liabilities,
net interest income also increased.
As the interest rate environment rose during 1994 and into 1995, the
change in the cost of interest bearing liabilities has outpaced the change
in the yield on earning assets. As shown in the consolidated average
balance sheets (page 16), the yield on earning assets, increased 69 basis
points to 8.42% in the first six months of 1995 from 7.73% in the first six
months of 1994. During the same period, the cost of interest bearing
liabilities increased 79 basis points to 4.07% from last year's 3.28% level.
Due to the greater increase in the cost of interest bearing liabilities, the
net interest margin decreased slightly to 4.93% during the first six months
of 1995, compared to 4.95% during the first six months of 1994. At June 30,
1995, One Valley's asset/liability structure was neither asset or liability
sensitive in the six month time frame. Thus, normal fluctuations in market
interest rates should have little impact on One Valley's net interest
margin.
Credit Experience
The provision for loan losses was $2.2 million for the six months
ended June 30, 1995, a 6.9% decline from the $2.4 million provision during
the first six months of 1994. The decline in the provision for loan losses
is primarily due to the continued good quality of the loan portfolio. As a
percentage of average total loans, the provision for loan losses through the
first six months of 1995 was 0.19% annualized compared to 0.22% in the first
six months of 1994. Net charge-offs as a percentage of average total loans
in the first six months of 1995 also decreased to 0.10% on an annualized
basis, down from an annualized 0.12% during the first six months of 1994.
Total non-performing assets at June 30, 1995, were 0.40% of period-end
loans, a slight decrease from the 0.41% at year-end 1994 and the 0.45% at
June 30, 1994. At June 30, 1995, loans past due over 90 days were 0.19% of
outstanding loans, a slight increase over the 0.16% at year-end 1994, and
the 0.12% level at June 30, 1994. The dollar amounts of both non-performing
assets and loans past due over 90 days are detailed in the analysis on page
15.
With the continued good credit quality of the loan portfolio, the
allowance for loan losses decreased in relation to the loan portfolio in
1994. At June 30, 1995, the allowance was 1.58% of outstanding loans,
unchanged from the 1.58% at year-end, but down from the 1.68% one year ago.
On January 1, 1995, One Valley adopted the provisions of FASB
Statement 114, "Accounting by Creditors for Impairment of a Loan" as amended
by FASB Statement 118. Under Statement 114 a loan is impaired when, based
on current information and events, it is probable that One Valley will be
unable to collect all amounts due according to the contractual terms of a
loan agreement. The effect of adopting this Statement was immaterial to One
Valley's financial statements.
Non-Interest Income and Expense
Total non-interest income was $19.0 million through the first six
months of 1995, down 1.9% from the $19.4 million non-interest income earned
during the same period in 1994. Trust income decreased by 1.2% from the
first six months of last year. Service charges on deposit accounts
increased by 20.6% in the first six month comparisons due to new product
fees introduced in the fourth quarter of 1994. Real estate loan processing
and service fees declined by 16.5% when compared to the first half of 1994.
Increases in interest rates over the past 18 months have reduced the volume
of loan originations and consequently fees from the origination and sale of
loans in the secondary market have decreased. Other service charges and
fees increased by 4.8% over the first six months of 1994, primarily due to
increases in credit life commissions. Other operating income decreased by
$1.4 million or 28.7% due to a lower level of income recognized on the
disposition of other real estate owned and other loan payoffs.
Total non-interest expense was $61.4 million during the six months
ended June 30, 1995, up 2.9% over the same period in 1994. Staff costs were
relatively unchanged when compared to 1994. Occupancy expense increased by
4.9% and equipment expense increased by 6.7% in the first six months of 1995
due to an increase in depreciation resulting from facility renovations.
Outsourcing data processing expense was relatively unchanged when compared
to the same period in 1994, while other operating expenses increased 7.9% in
the first six months of 1995, largely due to expenses related to the new
deposit products introduced in the fourth quarter of 1994. These expenses
were more than offset by the increases in new product fees discussed above.
The net overhead ratio (non-interest expense less non-interest income
excluding security transactions divided by average earning assets) is a
measure of the company's ability to control costs and equalizes the
comparison of differently sized operations. As this ratio decreases, more
of the net interest margin earned flows to net income. One Valley's net
overhead ratio for the first six months of 1995 was 2.51%, down slightly
from 2.55% during all of 1994 but up from the 2.46% during the first six
months of 1994. The increase in the first half of 1995 when compared to the
first half of 1994 is largely due to the declines in non-interest income
discussed above.
Income tax expense increased by $371,000, or 3.3%, for the first six
months of 1995 in comparison to 1994. The increase in taxes is a result of
the 3.2% growth in pretax earnings. One Valley's effective income tax rate
for the first six months of 1995 and 1994 was 32.7%.
FINANCIAL CONDITION
Asset Structure
Total loans continued to grow when compared to the first six months of
1994. At June 30, 1995, total loans exceeded June 30, 1994, levels by 8.8%
or $197.3 million. The consolidated loan-to-deposit ratio has also
increased to 79.5% at June 30, 1995, compared to 75.5% at June 30, 1994.
Since year-end 1994, total loans have increased by 2.8% or $65.8 million.
This increase in total loans has resulted from balanced growth in the three
major loan categories; commercial, real estate, and consumer installment.
In May 1995, the FASB issued Statement 122, Accounting for Mortgage
Servicing Rights, to be adopted for fiscal years beginning after December
15, 1995. The adoption of this Statement is not anticipated to have a
material effect on One Valley's financial statements.
Investment portfolio assets increased $23.2 million or 2.4% from the
level at year-end but decreased $68.8 million or 6.4% from the level one
year ago. Due to strong loan demand during 1994, growth in the investment
portfolio has been relatively modest as One Valley has been able to place
more of its investable funds into the higher yielding loan portfolio.
At the time of purchase, management determines the appropriate
classification of securities. If management has the positive intent and One
Valley has the ability at the time of purchase to hold securities until
maturity, they are classified as held-for-investment and carried at
amortized historical cost adjusted for amortization of premiums and
accretion of discounts, which are recognized as adjustments to interest
income. Securities to be held for indefinite periods of time and not
intended to be held to maturity or on a long-term basis are classified as
available-for-sale and carried at fair value. The corresponding difference
between the historical cost and the current fair value of these securities,
the unrealized gain or loss, is an adjustment to shareholders' equity, net
of deferred taxes. Securities available-for-sale include securities that
management intends to use as part of its asset/liability management strategy
and that may be sold in response to changes in interest rates, resultant
prepayment risk, and other factors related to interest rate and resultant
prepayment risk changes.
Securities designated as available-for-sale at June 30, 1995, had an
historical cost of $541.0 million, with an unrealized gain of approximately
$3.6 million, which increased shareholders' equity by $2.2 million, net of
$1.4 million in deferred income taxes. At year-end December 31, 1994, and
June 30, 1994, securities available-for-sale had an historical cost of
$552.1 million and $620.6 million, with an unrealized loss of approximately
$10.9 and $4.9 million, respectively. These unrealized losses decreased
shareholders' equity by $6.5 and $2.9 million, net of $4.4 and $2.0 million
in deferred taxes, respectively.
In order to improve its fully tax equivalent net interest income and
to hedge against higher income tax rates, One Valley increased its holdings
of tax-exempt securities that were offering attractive yields in 1994. As
shown on the consolidated average balance sheets (page 16), average tax-
exempt securities in the first half of 1995 increased by 7.7% over the
average during the first half of 1994. One Valley will continue to monitor
its investment opportunties and may purchase additional tax-exempt
securities of similar yield and quality.
Federal funds sold at June 30, 1995, were $16.7 million, down $8.1
million from year-end but up $14.3 million from one year ago. Fluctuations
in federal funds sold are normal and largely due to planned changes in the
company's asset/liability structure in order to maximize the return on
investment in response to changes in the interest rate environment.
Liability Structure
Total deposits increased $93.7 million or 3.2% from the level at year-
end and increased $102.1 million or 3.5% since June 30, 1994. Non-interest
deposits have increased by 1.3% from year-end, but have decreased by 8.8%
since June 30, 1994. Interest bearing deposits at June 30, 1995, increased
$88.8 million or 3.5% from year-end and $139.0 million or 5.6% from one year
ago. The acquisition of Point Bancorp in the first quarter of 1995
contributed $42.2 million to the increase in interest-bearing deposits. In
addition, due to the low interest rate environment compared to the early
1990's, deposit customers are shortening the maturities of their deposit
reinvestments and seeking higher yielding non-traditional investment
alternatives. In the fourth quarter of 1994, One Valley introduced new
checking products and continues to expand other products to attract new
customers and to provide alternatives for current customers.
Total short-term borrowings decreased $71.5 million or 19.0% from the
year-end level, but increased $31.0 million or 11.3% from the level at June
30, 1994. Short-term borrowings, which consist of Federal funds purchased
from correspondent banks, repurchase agreements with large corporate and
public entities, and advances on credit lines available to the company can
fluctuate significantly depending upon the customers' cash needs and the
interest rate environment.
Long-term borrowings declined $8.0 million or 41.2% since year-end
1994 and $16.0 million or 58.4% since June 30, 1994. The decline since
year-end 1994 was the result of $8.0 million in pay downs on long-term
advances from the FHLB. The $11.4 million of long-term borrowings at June
30, 1995, principally consists of FHLB advances incurred prior to 1994 to
fund investments in mortgage backed securites. Approximately $3.5 million
of these advances mature in 1995, and another $5.0 million mature in 1996.
Acquisitions
On March 15, 1995, One Valley acquired all of the outstanding stock of
Point Bancorp, Inc., the parent company of a $57 million Federal Savings
Bank located in Point Pleasant, WV. Pursuant to the merger agreement, One
Valley exchanged 0.6 shares of its common stock and $7.10 for each share of
Point Bancorp common stock. A total of 411,602 shares were issued in this
trasaction. The combination was accounted for under the purchase method of
accounting. Accordingly, consolidated results include the operations of
Point Bancorp only from the date of acquisition.
Capital Structure and Liquidity
One Valley's equity-to-asset ratio has increased since year-end. At
June 30, 1995, the ratio was 9.50% compared to 8.76% at December 31, 1994,
and 8.83% one year ago. This increase since year-end is primarily
attributable to the issuance of common stock in the acquisition of Point
Bancorp in March, 1995, explained above.
One Valley's cash dividends, totaling $0.50 per share through the
first six months of 1995, were up 13.6% over the $0.44 per share dividend
during the same period in 1994. One Valley's dividend policy coupled with
the continued growth in net income, demonstrates management's commitment to
a strong equity-to-asset ratio benefiting both the investor and the
depositors of the local community. One Valley's risk based capital ratio at
June 30, 1995 was 15.63%, well above the 8.0% required, while its Tier I
capital ratio was 14.38%. One Valley's strong capital position is
demonstrated further by its leverage ratio of 9.2% compared to regulatory
guidance of 4.0% to 5.0%. The capital ratios of the banking subsidiaries
also remain strong and allow them to effectively serve the communities in
which they are located.
The capital positions of the banks, coupled with proper
asset/liability matching and the stable nature of the primarily consumer
base of core deposits, results in the maintenance of a strong liquidity
position. The liquidity of the parent company is dependent upon dividends
from its banking subsidiaries which, although restricted by banking
regulations, are adequate to meet its cash needs.
The Board of Directors has authorized management to repurchase shares
of One Valley Bancorp common stock in the open market. As of June 30, 1995,
One Valley held 680,500 shares of treasury stock, and is authorized to
repurchase up to 491,100 in additional treasury shares. The timing of
additional purchases, if any, will depend upon future market conditions.
Effects of Changing Prices
The results of operations and financial condition presented in this
report are based on historical cost, unadjusted for the effects of
inflation. Inflation affects One Valley in two ways. One is that inflation
can result in increased operating costs which must be absorbed or recovered
through increased prices for services. The second effect is on the
purchasing power of the corporation. Virtually all of a bank's assets and
liabilities are monetary in nature. Regardless of changes in prices, most
assets and liabilities of the banking subsidiaries will be converted into a
fixed number of dollars. Non-earning assets, such as premises and
equipment, do not comprise a major portion of One Valley's assets;
therefore, most assets are subject to repricing on a more frequent basis
than in other industries. One Valley's ability to offset the effects of
inflation and potential reductions in future purchasing power depends
primarily on its ability to maintain capital levels by adjusting prices for
its services and to improve net interest income by maintaining an effective
asset/liability mix.
<PAGE>
<TABLE>
ONE VALLEY BANCORP OF WEST VIRGINIA, INC. AND SUBSIDIARIES
Analysis of Loan Losses and Non-Performing Assets
(unaudited in thousands)
<CAPTION>
For The Three Months For The Six Months
Ended June 30 Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Allowance For Loan Losses
Balance, Beginning of Period $38,412 $37,111 $37,438 $36,484
Loan Losses 1,365 1,189 2,405 2,325
Loan Recoveries 482 437 1,148 1,021
------- ------- ------- -------
Net Charge-offs 883 752 1,257 1,304
Balance of Acquired Subsidiary 0 0 235 0
Provision For Loan Losses 1,113 1,213 2,226 2,392
------- ------- ------- -------
Balance, End of Period $38,642 $37,572 $38,642 $37,572
======= ======= ======= =======
Total Loans, End of Period $2,438,786 $2,241,449
Allowance For Loan Losses As a % of Total Loans 1.58 1.68
========== ==========
Non-Performing Assets at Quarter End
Non-Accrual Loans $8,144 $7,605
Foreclosed Properties 1,300 2,404
Restructured Loans 410 169
------- -------
Total Non-Performing Assets $9,854 $10,178
======= =======
Non-Performing Assets As a % of Total Loans 0.40 0.45
Loans Past Due Over 90 Days $4,654 $2,741
Loans Past Due Over 90 Days As a % of Total Loans 0.19 0.12
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP OF WEST VIRGINIA, INC. AND SUBSIDIARIES
Consolidated Average Balance Sheets
(unaudited in thousands)
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
1995 1994 1995 1994
Amount Yield/Rate Amount Yield/Rate Amount Yield/Rate Amount Yield/Rate
(pct.) (pct.) (pct.) (pct.)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans
Taxable $2,382,494 9.09 $2,161,681 8.49 $2,363,984 9.04 $2,143,090 8.48
Tax-Exempt 34,352 11.25 33,896 10.07 34,700 11.21 33,640 10.38
---------- ---------- ---------- ----------
Total 2,416,846 9.12 2,195,577 8.52 2,398,684 9.08 2,176,730 8.51
Less: Allowance for Losses 38,741 37,308 38,278 37,024
---------- ---------- ---------- ----------
Net Loans 2,378,105 9.27 2,158,269 8.67 2,360,406 9.22 2,139,706 8.66
Securities
Taxable 805,027 6.31 889,233 5.39 802,284 6.14 901,432 5.47
Tax-Exempt 179,141 8.59 184,628 9.47 178,956 8.61 171,490 8.97
---------- ---------- ---------- ----------
Total 984,168 6.73 1,073,861 6.09 981,240 6.59 1,072,922 6.03
Federal Funds Sold & Other 60,819 6.09 19,819 3.04 38,152 5.94 33,643 2.96
---------- ---------- ---------- ----------
Total Earning Assets 3,423,092 8.48 3,251,949 7.78 3,379,798 8.42 3,246,271 7.73
Other Assets 263,755 262,378 264,844 260,693
---------- ---------- ---------- ----------
Total Assets $3,686,847 $3,514,327 $3,644,642 $3,506,964
========== ========== ========== ==========
Liabilities And Equity
Interest Bearing Liabilities
Deposits $2,642,699 4.10 $2,527,311 3.28 $2,606,666 3.99 $2,524,753 3.31
Short-term Borrowings 266,605 4.81 209,669 2.74 273,336 4.78 205,323 2.77
Long-term Borrowings 12,925 5.74 19,918 5.82 14,060 5.89 21,187 5.08
---------- ---------- ---------- ----------
Total Interest
Bearing Liabilities 2,922,229 4.18 2,756,898 3.26 2,894,062 4.07 2,751,263 3.28
Non-interest Bearing Deposits 383,188 419,197 379,099 414,484
Other Liabilities 32,688 24,136 32,841 28,120
---------- ---------- ---------- ----------
Total Liabilities 3,338,105 3,200,231 3,306,002 3,193,867
Shareholders' Equity 348,742 314,096 338,640 313,097
---------- ---------- ---------- ----------
Total Liabilities & Equity $3,686,847 $3,514,327 $3,644,642 $3,506,964
========== ========== ========== ==========
Interest Income To Earning Assets 8.48 7.78 8.42 7.73
Interest Expense To Earning Assets 3.56 2.76 3.49 2.78
------ ------ ------ ------
Net Interest Margin 4.92 5.02 4.93 4.95
====== ====== ====== ======
<FN> Note: Yields are computed on a fully taxable equivalent basis using the rate of 35%.
</TABLE>
<PAGE>
One Valley Bancorp of West Virginia, Inc.
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
The Regular Annual Meeting of Shareholders of One Valley was held on
April 25, 1995. At that meeting the matters set forth below were voted
upon. The number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes concerning each matter and
nominee are indicated in the following tabulation.
1. Election of Directors
Withheld & Broker
Nominee For Against Abstensions Non-Votes
Baronner 13,351,608 0 71,984 0
Blair 13,343,884 0 71,984 0
Brown 13,355,239 0 71,984 0
Chilton 13,359,833 0 71,984 0
Evans 13,358,992 0 71,984 0
Goodwin 13,300,289 0 71,984 0
Morrison 13,340,657 0 71,984 0
Orders 13,356,358 0 71,984 0
Payne 13,358,482 0 71,984 0
Robinson 13,334,318 0 71,984 0
Wehrle 13,299,003 0 71,984 0
2. Approve Selection of Auditors
Withheld & Broker
For Against Abstensions Non-Votes
13,366,848 13,921 32,912 0
<PAGE>
One Valley Bancorp of West Virginia, Inc.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a.) Exhibits
11. Statement of Computation of Earnings per Share - page 19
attached
27. Financial Data Schedule - electronic copy only.
b.) Reports on Form 8-K
None filed.
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.
One Valley Bancorp of West Virginia, Inc.
DATE August 11, 1995
BY /s/J. Holmes Morrison
J. Holmes Morrison
President and
Chief Executive Officer
BY /s/Laurance G. Jones
Laurance G. Jones
Senior Vice President & Treasurer
<TABLE>
Exhibit 11
Statement Re: Computation of Earnings per Share
<CAPTION>
For The Three Months For The Six Months
Ended June 30 Ended June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
PRIMARY:
Average Shares Outstanding 17,354,000 17,165,000 17,217,000 17,207,000
Net effect of the assumed exercise
of stock options - based on the
treasury stock method 110,000 93,000 107,000 95,000
------------ ------------ ------------ ------------
Total 17,464,000 17,258,000 17,324,000 17,302,000
============ ============ ============ ============
Net Income $12,297,000 $12,049,000 $23,586,000 $22,880,000
Per Share Amount $0.70 $0.70 $1.36 $1.32
============ ============ ============ ============
FULLY DILUTED:
Average Shares Outstanding 17,354,000 17,165,000 17,217,000 17,207,000
Net effect of the assumed exercise
of stock options - based on the
treasury stock method 124,000 102,000 133,000 105,000
------------ ------------ ------------ ------------
Total 17,478,000 17,267,000 17,350,000 17,312,000
============ ============ ============ ============
Net Income $12,297,000 $12,049,000 $23,586,000 $22,880,000
Per Share Amount $0.70 $0.70 $1.36 $1.32
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF INCOME OF ONE VALLEY BANCORP AS
WELL AS SUPPLEMENTAL SCHEDULES OF THE ANALYSIS OF LOAN LOSSES AND NON-PERFORMING
ASSETS AND THE CONSOLIDATED AVERAGE BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES.
</LEGEND>
<RESTATED>
<CIK> 0000351616
<NAME> ONE VALLEY BANCORP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 144337
<INT-BEARING-DEPOSITS> 8485
<FED-FUNDS-SOLD> 16700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 544570
<INVESTMENTS-CARRYING> 465004
<INVESTMENTS-MARKET> 469125
<LOANS> 2438786
<ALLOWANCE> 38642
<TOTAL-ASSETS> 3723891
<DEPOSITS> 3020219
<SHORT-TERM> 303878
<LIABILITIES-OTHER> 34636
<LONG-TERM> 11440
<COMMON> 179804
0
0
<OTHER-SE> 173914
<TOTAL-LIABILITIES-AND-EQUITY> 3723891
<INTEREST-LOAN> 107274
<INTEREST-INVEST> 29647
<INTEREST-OTHER> 1123
<INTEREST-TOTAL> 138044
<INTEREST-DEPOSIT> 51530
<INTEREST-EXPENSE> 58417
<INTEREST-INCOME-NET> 79627
<LOAN-LOSSES> 2226
<SECURITIES-GAINS> 20
<EXPENSE-OTHER> 61377
<INCOME-PRETAX> 35067
<INCOME-PRE-EXTRAORDINARY> 35067
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23586
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
<YIELD-ACTUAL> 4.93
<LOANS-NON> 8144
<LOANS-PAST> 4654
<LOANS-TROUBLED> 410
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 37438
<CHARGE-OFFS> 2405
<RECOVERIES> 1148
<ALLOWANCE-CLOSE> 38642
<ALLOWANCE-DOMESTIC> 38642
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
