SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter year ended September 30, 1995
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-10971
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ABIGAIL ADAMS NATIONAL BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 52-1508198
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(State or other jurisdiction of (I.R.S. Employer ID No.)
Incorporation or organization)
1627 K Street, N.W. Washington, D.C. 20006
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(Address of principal executive offices) (Zip code)
N / A
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Former name, address, and fiscal year, if changes since last report
Indicate by check 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 outstanding of each of the issuer's classes
of common stock as of November 7, 1995.
284,844 shares of Common Stock, Par Value $10/share.
<PAGE>
PART I.
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Item 1 - Financial Statements
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The information furnished herewith reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the results of the
interim periods presented. All adjustments are of a normal and recurring nature.
Certain reclassifications have been made to amounts previously reported in 1994
to conform with the 1995 presentation.
1
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1995 and 1994 and December 31, 1994
<TABLE>
<CAPTION>
Sept 30 Sept 30 December 31
1995 1994 1994
---- ---- ----
Assets (unaudited) (unaudited)
- ----------------------------
<S> <C> <C> <C>
Cash and due from banks $4,004,500 $4,505,582 $4,349,250
Short-term investments:
Federal funds sold and securities purchased
under agreements to resell 425,000 825,000 1,300,000
Interest bearing deposits in other banks 391,715 490,715 490,715
-------------------------------------------
Total short-term investments 816,715 1,315,715 1,790,715
Securities available for sale 4,497,999 5,535,752 6,009,025
Investments securities (market value of $9,794,674,
$9,459,963 and $8,838,874 at September 30, 1995,
September 30, 1994 and December 31, 1994, respectively) 9,707,042 9,582,472 9,080,778
Loans 59,652,497 58,260,355 60,729,437
Less: Allowance for loan losses (1,271,591) (1,225,640) (1,289,562)
-------------------------------------------
58,380,906 57,034,715 59,439,875
Bank premises and equipment 281,327 387,626 369,218
Other assets 1,197,765 933,951 1,221,580
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Total assets $78,886,254 $79,295,813 $82,260,441
===========================================
Liabilities
- -----------------------
Demand deposits 20,441,476 19,434,174 19,677,159
NOW accounts 7,887,076 10,080,197 10,381,478
Money market deposit accounts 14,805,708 14,210,181 17,850,822
Savings deposits 1,201,320 1,242,139 1,225,538
CD's $100,000 and over 10,428,744 13,611,541 13,651,233
CD's under $100,000 15,201,064 12,916,974 12,507,272
-------------------------------------------
Total deposits 69,965,388 71,495,206 75,293,502
Federal funds purchased and securities sold
under agreements to repurchase 1,761,208 1,331,215 360,708
Long-term debt -- capital note 204,875 279,375 260,750
Other liabilities 539,553 644,081 583,211
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Total liabilities 72,471,024 73,749,877 76,498,171
Stockholders' Equity
- ------------------------
Common stock, par value, $10 per share,
authorized 800,000 shares;
issued 286,404; outstanding 284,844 2,864,040 2,864,040 2,864,040
Surplus 3,291,973 3,291,973 3,291,973
Retained earnings (deficit) 339,171 (506,987) (284,646)
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6,495,184 5,649,026 5,871,367
Less: Treasury Stock, 1,560 shares at cost (28,710) (28,710) (28,710)
Unrealized loss on securities, net of taxes (51,244) (74,380) (80,387)
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Total stockholders' equity 6,415,230 5,545,936 5,762,270
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Total liabilities and stockholders' equity $78,886,254 $79,295,813 $82,260,441
============================================
</TABLE>
2
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ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Period Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
For three months For nine months
Ended September 30, Ended September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
- ----------------------------
Interest and fees on loans $1,518,689 $1,313,254 $4,416,395 $3,728,150
Interest and dividends on investment securities:
U.S. Treasury 17,217 18,190 53,344 26,863
Obligations of U.S. government agencies 131,098 109,826 327,292 268,710
Mortgage-backed securities 8,886 11,245 30,186 39,370
Other 6,940 2,267 25,423 6,800
----------------------------------------------------
Total interest and dividends on investment securities 164,141 141,528 436,245 341,743
Interest on securities available for sale:
U.S. Treasury 46,345 46,020 138,540 174,439
Obligations of U.S. government agencies 5,005 31,486 83,575 140,069
----------------------------------------------------
Total interest on securities available for sale 51,350 77,506 222,115 314,508
Interest on federal funds sold 23,865 20,354 88,940 71,283
Interest on deposits with other banks 5,718 4,287 16,530 12,231
----------------------------------------------------
Total interest income 1,763,763 1,556,929 5,180,225 4,467,915
Interest expense
- ----------------------------
Interest on deposits:
NOW 61,446 71,051 204,644 203,498
Money market deposit accounts 196,247 142,833 603,246 375,084
Savings deposits 7,630 7,711 22,578 21,195
CD's $100,000 and over 160,935 128,969 537,997 373,843
CD's under $100,000 235,214 133,153 618,285 339,411
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661,472 483,717 1,986,750 1,313,031
Interest on federal funds purchased and securities
sold under agreements to repurchase 21,570 19,314 64,400 36,287
Interest on other borrowings 0 1,222 6,559 1,222
Interest on subordinated note 3,353 4,470 10,896 13,838
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Total interest expense 686,395 508,723 2,068,605 1,364,378
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Net interest income 1,077,368 1,048,206 3,111,620 3,103,537
Provision for loan losses 0 70,524 0 221,572
----------------------------------------------------
Net interest income after provision for loan losses 1,077,368 977,682 3,111,620 2,881,965
</TABLE>
3
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ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Period Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
For three months For nine months
Ended September 30, Ended September 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Other income:
- ----------------------------
Service charges on deposit accounts 192,907 167,043 562,759 515,840
Other fees and commissions 31,730 24,825 80,161 73,101
Gain (loss) on securities transaction 0 0 0 (281)
----------------------------------------------------
Total other income 224,637 191,868 642,920 588,660
Other expense:
- ----------------------------
Salaries and employee benefits 409,537 384,585 1,238,551 1,219,044
Net occupancy expense 182,010 198,769 558,575 564,320
Professional fees 124,028 207,005 302,488 778,821
Data processing fees 70,737 66,968 205,250 195,762
Other operating expense 180,330 268,781 589,239 1,119,151
----------------------------------------------------
Total other expense 966,642 1,126,108 2,894,103 3,877,098
----------------------------------------------------
Income before taxes 335,363 43,442 860,437 (406,473)
Income tax expense 93,620 0 236,620 0
----------------------------------------------------
Net income $241,743 $43,442 $623,817 ($406,473)
====================================================
Earnings per share:
- ----------------------------
Net income per share $0.85 $0.15 $2.19 ($1.43)
====================================================
Average shares outstanding 284,844 284,844 284,844 284,844
====================================================
</TABLE>
4
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ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
For Nine Months Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
Additional Retained Unrealized
Common Paid-in Earnings Treasury Loss on
Stock Capital (Deficit) Stock Securities Total
----- ------- --------- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $2,864,040 $3,291,973 ($100,514) ($28,710) $0 $6,026,789
Net loss (406,473) (406,473)
Unrealized loss on securities,
net of taxes (74,380) (74,380)
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Balance, September 30, 1994 $2,864,040 $3,291,973 ($506,987) ($28,710) ($74,380) $5,545,936
===============================================================================
Balance, January 1, 1995 $2,864,040 $3,291,973 ($284,646) ($28,710) ($80,387) $5,762,270
Net income 623,817 623,817
Unrealized gain on securities,
net of taxes 29,143 29,143
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Balance, September 30, 1995 $2,864,040 $3,291,973 $339,171 ($28,710) ($51,244) $6,415,230
===============================================================================
</TABLE>
5
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flow
For the Nine months Ended September 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
Operating Activities
- -------------------------------------------
<S> <C> <C>
Net income (loss) $623,817 ($406,473)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 0 221,572
Depreciation and amortization on bank premises & equipment 117,156 112,999
Loss on sale of securities 0 281
Loss on sale of other real estate 0 11,516
Accretion of loan discounts (53,784) (3,088)
Amortization and accretion of discounts and premiums on investment securities 18,225 25,126
Decrease in other assets 23,815 96,718
Decrease in other liabilities (86,083) (428,281)
------------------------------
Net cash provided (used) by operating activities 643,146 (369,630)
Investing Activities
- -------------------------------------------
Proceeds from repayment and maturity of investment securities 300,000 300,000
Proceeds from repayment of mortgage-backed securities 103,710 236,627
Proceeds from repayment and maturity of securities available for sale 7,588,400 5,250,000
Proceeds from sale of securities 0 449,719
Purchase of investment securities (1,003,825) (1,746,734)
Purchase of securities available for sale (6,072,462) (3,747,500)
Proceeds from maturity of interest-bearing deposits in other banks 99,000 0
Principal collected on loans 10,533,176 7,661,210
Loans originated (10,738,535) (12,986,640)
Loans acquired from FDIC as receiver for other banks 0 (493,086)
Net decrease (increase) in short-term loans (67,160) 2,018,540
Net decrease in lines of credit 1,407,552 47,022
Purchase of bank premises and equipment (29,263) (161,504)
Proceeds from disposition of other real estate 0 716,984
------------------------------
Net cash provided (used) by investing activities 2,120,593 (2,455,362)
Financing Activities
- -------------------------------------------
Net decrease in transaction and savings deposits (4,799,417) (1,219,832)
Proceeds from issuance of time deposits 33,259,593 25,853,898
Payments for maturing time deposits (33,788,290) (25,595,137)
Net increase in Federal funds purchased and repurchase agreements 1,400,500 1,136,325
Payments on long-term debt (55,875) (37,625)
------------------------------
Net cash provided by financing activities (3,983,489) 137,629
------------------------------
Increase (decrease) in cash & cash equivalents (1,219,750) (2,687,363)
Cash and cash equivalents at beginning of period 5,649,250 8,017,945
------------------------------
Cash and cash equivalents at end of period $4,429,500 $5,330,582
==============================
Supplementary disclosures:
Interest paid on deposits and borrowings $2,065,399 $1,369,385
==============================
Income taxes paid $175,593 $511,250
==============================
</TABLE>
6
<PAGE>
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PART I. FINANCIAL INFORMATION (CONTINUED)
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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Total assets of Abigail Adams National Bancorp, Inc. and subsidiary (the
"Company") were $78,886,000 at September 30, 1995 as compared to $82,260,000 at
December 31, 1994 and $79,296,000 at September 30, 1994. Total assets at
September 30, 1995 decreased by $3,374,000 from December 31, 1994, with
decreases approximately evenly distributed between cash and short-term
investments ($1,319,000), total securities ($885,000) and loans ($1,077,000).
Total deposits decreased by $5,328,000 during the same period to $69,965,000 at
September 30, 1995, while Federal funds purchased and securities sold under
agreements to repurchase increased by $1,400,000 to $1,761,000 and stockholders'
equity increased by $653,000 to $6,415,000.
The loan portfolio at September 30, 1995 of $59,652,000 decreased by
$1,077,000, or approximately 2%, as compared to the December 31, 1994 balance of
$60,729,000 primarily due to fluctuations in the outstanding balance of
commercial loans issued under lines of credit. Loans outstanding on commercial
lines of credit were approximately 41% of the total line amount at September 30,
1995 as compared to 49% at December 31, 1994. New loans of $10,739,000 were
originated in the first three quarters of 1995. However, loan principal payments
of $10,533,000 offset the majority of this increase. The loan to deposit ratio
at September 30, 1995 was 85% as compared to 81% at December 31, and September
30, 1994. The increase in this ratio is primarily attributable to the withdrawal
of $5,000,000 in District of Columbia funds during the second and third quarter
of 1995. On average the loan to deposit ratio for the first nine months of 1995
was 82% as compared to 79% for the comparable 1994 period.
The Company accounts for its securities in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS No. 115). SFAS No. 115 requires that upon the
purchase of debt and marketable equity securities, the Company must classify the
securities into one of three categories: trading, available for sale or held to
maturity. Trading securities are bought and held principally for the purpose of
selling them in the near term and are reported at fair value, with unrealized
gains and losses included in earnings. Held to maturity securities are those
securities in which the Company has the ability and the intent to hold the
security until maturity and are reported at amortized cost. All other securities
not included in trading or held to maturity are classified as available for sale
and are reported at fair value, with the unrealized gains
7
<PAGE>
and losses, net of taxes, reported as a separate component of shareholders'
equity. The available for sale portfolio exists to maintain adequate liquidity
and to provide a base for executing asset/liability management strategy. The
value of available for sale securities fluctuates based on changes in interest
rates and other factors. Generally an increase in interest rates will result in
a decline in the value of securities available for sale, while a decline in
interest rates will result in an increase in the value of such securities.
Therefore, the value of securities available for sale and the Company's
shareholders' equity is subject to fluctuations based on changes in interest
rates. Unrealized gains in the available for sale portfolio at September 30,
1995 were approximately $2,000, net of taxes. Unrealized losses, net of taxes,
at September 30, 1995 on securities previously classified as available for sale
in early 1994 which were subsequently reclassified to held to maturity were
$53,000.
Securities available for sale totaling $7,588,000 matured during the first
nine months of 1995 as compared to purchases of $6,072,000 during the same
period. These securities transactions coupled with scheduled amortization and
accretion for the first nine months, accounted for the $1,511,000 decrease in
the available for sale portfolio from $6,009,000 at December 31, 1994 to
$4,498,000 at September 30, 1995. The long-term investment portfolio of
$9,707,000 at September 30, 1995 increased by $626,000, or 7%, from December 31,
1994 due principally to the purchase of one security, partially offset by normal
pay downs on mortgage-backed and other amortizing securities.
Short-term investments decreased by $974,000 to $817,000 at September 30,
1995 from $1,791,000 at December 31, 1994 due principally to normal fluctuations
in the Company's liquidity.
Cash and due from banks of $4,005,000 at September 30, 1995 decreased by
$344,000 from the December 31, 1994 balance of $4,349,000 due to variations in
both levels of cash as well as balances maintained at correspondent banks.
Total deposits of $69,965,000 at September 30, 1995 decreased by
$5,328,000, or 7%, from the December 31, 1994 balance of $75,294,000. Demand
deposits of $20,441,000 at September 30, 1995 reflect a $764,000, or 4%,
increase over the balance at December 31, 1994 due primarily to normal
fluctuations in commercial accounts. Normal fluctuations in the deposit accounts
of one large national organization as well as other personal and nonprofit
accounts make up the majority of the $2,494,000 decrease in NOW accounts of
$7,887,000 at September 30, 1995 as compared to $10,381,000 at December 31,
1994. Money market accounts of $14,806,000 at September 30, 1995 decreased by
$3,045,000 as compared to $17,851,000 at December 31, 1994 due principally to
normal fluctuations in the balances of several large commercial customers.
Certificates of deposit at September 30, 1995 of $25,630,000 decreased by
$529,000 over the $26,159,000 balance at December 31, 1994. The increase in
certificates of deposit
8
<PAGE>
under $100,000 from December 31, 1994 to September 30, 1995 is principally due
to the issuance of approximately $3,500,000 in brokered certificates of deposit
during the first quarter of 1995. During 1994, certificates of deposit under
$100,000 were issued to custodial accounts for pension funds. Although some of
these custodial and pension fund deposits were withdrawn in the first three
months of 1995 prior to their contractual maturity, as a result of interest rate
increases experienced in 1994 and early 1995, approximately $2,200,000 in these
certificates of deposit under $100,000 remain outstanding at September 30, 1995.
Certificates of deposit over $100,000 at September 30, 1995 of $10,429,000
decreased by $3,222,000 over the December 31, 1994 balance of $13,651,000
primarily due to the withdrawal of $5,000,000 in District of Columbia deposits
which were on account at December 31, 1994.
Average noninterest-bearing demand deposits for the first nine months of
1995 of $18,020,000 decreased by $899,000, or 5%, from the comparable 1994
period, while average interest-bearing deposits grew by $1,516,000, or 3%,
during the same period to $55,950,000 for the first nine months of 1995. On
average, money market deposits and certificates of deposit under $100,000
increased from the prior year while NOW and savings accounts and certificates of
deposit $100,000 and over decreased. Average noninterest-bearing deposits to
average total deposits during the first nine months of 1995 represents 24% as
compared to 26% one year earlier.
Results of Operations
- ---------------------
The Company reported record net income of $624,000 for the first nine
months of 1995, for an annualized return on average assets of 1.01%, as compared
to a loss of $406,000 for the comparable 1994 period. The 1994 results include
$627,000 in legal and related costs associated with two employment related
lawsuits concluded during 1994, $189,000 in legal and other related costs
regarding the issue of the Company's ownership and $210,000 related to the
expensing of previously deferred professional fees related to the Company's
proposed securities offering. Similar expenses have not been incurred during
1995.
Net interest income, the most significant component of the Company's
earnings, increased by $8,000, or less than 1%, to $3,112,000 for the first nine
months of 1995 as compared to $3,104,000 for the comparable 1994 period. Average
earning assets for the first nine months of 1995 increased by $818,000, or 1%,
over the comparable 1994 period and the average loan to deposit ratio for 1995
increased to 82% from 79% the prior year. Although the average yield earned on
interest-earning assets increased 115 basis points to 8.94%, a 154 basis point
increase in the average cost of interest-bearing deposits coupled with an
$899,000 decrease in average demand deposits offset most of this positive impact
on the Company's net interest income. These factors resulted in a decrease in
the net interest spread from 4.55% for the first nine months of 1994 to 4.16%
for the first
9
<PAGE>
nine months of 1995. However, decreases in average noninterest-earning assets
coupled with increases in average shareholders' equity resulted in a lesser
impact on the net interest margin which decreased only 4 basis points to 5.37%
for the first nine months of 1995 as compared to 5.41% for the first nine months
of 1994.
As a result of improvement in the quality of the loan portfolio over the
last few years as well as relatively low levels of net charge-offs for the first
nine months of 1995, the Company did not record a provision for loan losses
during the first nine months of 1995, while a $222,000 provision was recorded
during the comparable 1994 period. While the Company continues to recognize the
risk characteristics of the loan portfolio, including specific reserves for
problem credits and general reserves for the overall loan portfolio, the Company
deems the allowance for loan losses of $1,272,000 at September 30, 1995 to be
adequate. The allowance for loan losses as a percentage of outstanding loans was
2.13% at September 30, 1995 as compared to 2.12% at December 31, 1994 and 2.10%
at September 30, 1994. Nonaccrual loans at September 30, 1995 of $1,634,000
decreased by $253,000 from $1,887,000 at September 30, 1994. However, total
nonperforming assets, which include nonaccrual loans, restructured loans and
loans past due ninety days or more, of $2,967,000 at September 30, 1995 have
increased by $338,000 from one year earlier due primarily to one loan which was
restructured in late 1994 but which is paying in accordance with the
restructured terms. Of the $2,967,000 nonperforming asset balance at September
30, 1995, $814,000 represents the guaranteed portion of loans insured by the
Small Business Administration ("SBA") which were on nonaccrual or restructured
status. This compares with total nonperforming assets of $2,629,000 at September
30, 1994 of which $1,320,000 represents the guaranteed portion of the loans
insured by the SBA. Banking regulations require that the full balance of these
loans be placed on nonaccrual status, despite the SBA guarantee on a portion of
the loan. The ratio of nonperforming loans to gross loans at September 30, 1995
is 4.97% as compared to 4.51% one year earlier.
Total other income of $643,000 for the first nine months of 1995 increased
by $54,000 from the $589,000 reported for the comparable 1994 period due
primarily to a greater volume of ATM income resulting from the installation of
newer ATM equipment in our Union Station location as well as the addition of one
new ATM machine in late 1994. A greater level of service chargeable activities
on deposit accounts also contributed to the increase.
Total other expenses for the first nine months of 1995 of $2,894,000
decreased by $983,000, or 25%, from $3,877,000 for the comparable 1994 period.
Salaries and benefits of $1,239,000 for the first nine months of 1995 reflect a
$20,000, or 2%, increase over the first nine months of 1994, while occupancy
expense of $559,000 decreased by $5,000, or 1%, during the same period due
principally to higher operating costs in 1994 which were passed through to the
Company by the landlord. Professional fees for the first nine months of 1995 of
10
<PAGE>
$302,000 decreased by $477,000, or 61%, from $779,000 for the first nine months
of 1994. In 1994, legal and other related costs were incurred in connection with
the issue of the Company's ownership, the Company's proposed securities offering
and the employment related lawsuits which were concluded in late 1994. Legal
expenses during the first nine months of 1995 were incurred primarily to resolve
the Company's ownership issue as well as to address other corporate and banking
matters. Other operating expenses for the first nine months of 1995 of $589,000
decreased by $530,000, or 47%, from $1,119,000 reported for the prior year, due
primarily to the employment related lawsuits settled in late 1994, as well as
cost savings in virtually every expense category. In addition, a retroactive
reduction in the FDIC deposit insurance premium assessment also contributed to
the decrease in other expense. During the third quarter of 1995, the Company was
advised by the FDIC that its deposit insurance premium assessment would decrease
from $0.21 per $100 of deposits to the new lowest rate of $0.04 per $100 of
deposit effective July 1, 1995. Also, during the third quarter of 1995, the
Company recorded professional fees of approximately $44,000 for investment
advisory fees in connection with the sale of the Company's stock and the related
tender offer. (See Item 5 - "Other Events - Changes in Control of the
Registrant" for a further discussion of issues relating to the Company's
ownership.)
Based on the financial results for the first nine months of 1995, as well
as earnings projections for the remainder of the year, the Company has recorded
tax expense of $237,000 using an effective tax rate of 27.5% in 1995 as compared
to a 0% tax rate on 1994's loss. This effective tax rate for 1995 of 27.5% is
used instead of the statutory rate of 40.77% as a result of reductions in the
deferred tax asset valuation allowance in existence at the beginning of the
year. Should actual financial results for subsequent quarters differ materially
from projections, the Company's effective tax rate for 1995 will change
accordingly.
Liquidity and Capital Resources
- -------------------------------
Principal sources of liquidity are cash and unpledged assets that can be
readily converted into cash, including investment securities maturing within one
year, the available for sale security portfolio and short-term loans. In
addition to $4,821,000 in cash and short-term investments at September 30, 1995,
the Company has a securities portfolio which can be pledged to raise additional
deposits and borrowings, if necessary. At September 30, 1995, the Company had
$8,955,000 in unpledged securities which were available for such use. This
compares with cash and short-term investments of $5,821,000 and unpledged
securities of $4,448,000 at September 30, 1994 and cash and short-term
investments of $6,140,000 and unpledged securities of $2,738,000 at December 31,
1994. As a percentage of total assets, the amount of these cash equivalent
assets at September 30, 1995, September 30, 1994 and December 31, 1994 was 17%,
13% and 11%, respectively. The Bank's liquidity
11
<PAGE>
needs are mitigated by the sizeable base of relatively stable funds which
includes demand deposits, NOW and money market accounts, savings deposits and
nonbrokered certificates of deposit under $100,000 (excluding such certificates
of deposit issued to financial institutions) representing 75% of the average
deposit base for the first nine months of 1995 and 77% for the first nine months
of 1994. In addition, the Bank has lines of credit from correspondent financial
institutions which can provide up to an additional $1,000,000 in liquidity. The
Bank is also a member of the Federal Home Loan Bank of Atlanta (the "FHLB"),
which serves as a reserve or central bank for member institutions within its
region. Based on the Bank's purchase of approximately $250,000 in stock in the
FHLB, the Bank is eligible to borrow up to approximately $1,500,000 in funds
from the FHLB collateralized by loans secured by first liens on one to four
family, multifamily and commercial mortgages as well as investment securities.
The Bank is eligible to increase the maximum amount to be borrowed by $7,500,000
with the purchase of up to $1,200,000 of additional stock in the FHLB. The Bank
has drawn on borrowings from the FHLB during the first nine months of 1995,
however no borrowings were outstanding at September 30, 1995. The Company has
adequate resources to meet its liquidity needs.
On July 21, 1995, Citibank's 71% beneficial interest in the Company was
sold to a group of predominantly female investors from West Virginia, thus
maintaining the Company's status as a women-owned financial institution. On
August 16, 1995, Marshall T. Reynolds, a member of the purchasing group,
commenced a tender offer to purchase the outstanding shares of Common Stock that
were not owned by him or his associates. The tender offer was completed on
September 15, 1995. A total of 4,627 shares was tendered and acquired by
Marshall T. Reynolds and Shirley A. Reynolds, jointly.
Under the risk based capital guidelines issued by the Federal Reserve Board
and the Comptroller of the Currency, total capital consists of core capital
(Tier 1) and supplementary capital (Tier 2). For the Company and the Bank, Tier
1 capital consists of stockholders' equity, excluding unrealized gains and
losses on securities, and Tier 2 capital consists of long-term debt and a
portion of the allowance for loan losses. Assets include items both on and off
the balance sheet, with each item being assigned a "risk-weight" for the
determination of the ratio of capital to risk-adjusted assets. These guidelines
require a minimum of 8% total capital to risk-adjusted assets, with at least 4%
being in Tier 1 capital. At September 30, 1995, the Company's total risk-based
capital ratio and Tier 1 capital ratio of 11.60% and 10.29%, respectively, met
the regulatory definition of "well-capitalized." Under regulatory guidelines, an
institution is generally considered "well-capitalized" if it has a total
risk-based capital ratio of 10% or greater, a Tier 1 capital ratio of 6% or
greater and a leverage ratio of 5% or greater (discussed below). The September
30,1995 ratios are based on Tier 1 capital of $6,466,000, total capital of
$7,290,000 and risk- adjusted assets of $62,866,000. At September 30, 1995, the
Bank's total risk-based capital ratio and Tier 1 capital ratio of 11.48% and
10.17%, respectively, also met the
12
<PAGE>
regulatory definition of "well-capitalized." The 1995 ratios for the Bank are
based on Tier 1 capital of $6,391,000, total capital of $7,213,000 and
risk-adjusted assets of $62,822,000.
The Federal Reserve Board and the Comptroller of the Currency have also
adopted a minimum leverage ratio of Tier 1 capital to total assets which is
intended to supplement the risk-based capital guidelines. The minimum Tier 1
leverage ratio is 3% for the most highly rated institutions which meet certain
standards. For other banks and bank holding companies, the guidelines provide
that the Tier 1 leverage ratio should be at least 1% to 2% higher. At September
30, 1995, the Company's and the Bank's Tier 1 leverage ratio based on annual
average assets of $82,486,000 and $82,395,000, were 7.84% and 7.76%,
respectively, meeting the regulatory definition of "well-capitalized."
On October 5, 1995, the Company declared a quarterly dividend o $0.25 per
share payable on October 20, 1995 to stockholders of record as of October 17,
1995. All regulatory capital ratios following the declaration and payment of the
$71,000 in dividends remain in the well-capitalized category.
13
<PAGE>
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 4 - Submission of Matters to a Vote of Security Holders
- --------------------------------------------------------------------------------
The Company held its Annual Meeting of Stockholders on October 17, 1995 to
elect nine directors and to ratify the selection of KPMG Peat Marwick LLP as
independent certified public accountants for the Company for 1994 and 1995.
All nine nominees for director were elected. The voting results were as
follows:
For Withheld
--- --------
Barbara Davis Blum 227,782 110
Shireen Dodson 225,282 2,610
Susan Hager 225,292 2,600
Jeanne D. Hubbard 225,282 2,610
Clarence L. James, Jr. 225,292 2,600
Marshall T. Reynolds 227,762 130
Robert L. Shell, Jr. 227,772 120
Dana Stebbins 225,292 2,600
Susan J. Williams 225,292 2,600
The voting results regarding the matter of ratification of KPMG Peat
Marwick LLP as independent certified public accountants for the Company for 1994
and 1995 were as follows:
For 227,742
Against 20
Abstentions 130
14
<PAGE>
- --------------------------------------------------------------------------------
Item 5 - Other Information
- --------------------------------------------------------------------------------
Changes in Control of the Registrant
- ------------------------------------
During April 1995, Citibank, N.A. (the beneficial owner of approximately
71% of the Company's common stock) entered into a definitive agreement to sell
its stock holdings to a group of investors. On July 21, 1995, this group of
investors (the "Purchaser Group") purchased from Citibank, N.A. an aggregate of
203,038 shares (the "Shares") of common stock, par value $10.00 per share (the
"Common Stock"), of the Company. According to an Amendment No. 1 to a Schedule
13D filed by the Purchaser Group (the "Schedule 13D"), the Shares were acquired
at a purchase price of $17.00 per share. Under an Agreement, dated as of April
20, 1995, between Marshall T. Reynolds, a member of the Purchaser Group, and the
Company, Mr. Reynolds commenced a tender offer on August 16, 1995 at $21.00 per
share for all of the outstanding shares of the Company's common stock not owned
by the Purchaser Group (the "Tender Offer"). On September 15, 1995, the Tender
Offer terminated, with a total of 4,627 Shares tendered, all of which were
accepted and paid for by Mr. Reynolds and Shirley A. Reynolds, jointly.
On October 17, 1995, Jeanne D. Hubbard, Marshall T. Reynolds and Robert L.
Shell, Jr., members of the Purchaser Group, joined the Company's and the Bank's
Board of Directors. The Boards of Directors of the Company and the Bank adopted
resolutions approving the election of these persons to the Boards so that their
election would not cause the payment of benefits under the Bank's severance
agreements.
15
<PAGE>
- -------------------------------------------------------------------------------
Item 6 - Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
19 Abigail Adams National Bancorp, Inc. Financial Summary for
September 30, 1995
27 Financial Data Schedule
</TABLE>
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1995.
16
<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, thereunto duly
authorized.
ABIGAIL ADAMS NATIONAL BANCORP, INC.
------------------------------------
(Registrant)
Date: November 13, 1995 /s/Barbara Davis Blum
----------------------- ---------------------
Barbara Davis Blum
Chairwoman of the Board,
President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 13, 1995 /s/Kimberly J. Levine
----------------------- ---------------------
Kimberly J. Levine
Senior Vice President & Treasurer
(Principal Financial and
Accounting Officer)
17
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
ABIGAIL ADAMS NATIONAL BANCORP, INC AND SUBSIDIARY
</LEGEND>
<CIK> 0000356809
<NAME> ABIGAIL ADAMS NATIONAL BANCORP, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 4,004,500
<INT-BEARING-DEPOSITS> 391,715
<FED-FUNDS-SOLD> 425,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,497,999
<INVESTMENTS-CARRYING> 9,707,042
<INVESTMENTS-MARKET> 9,794,674
<LOANS> 59,652,497
<ALLOWANCE> (1,271,591)
<TOTAL-ASSETS> 78,886,254
<DEPOSITS> 69,965,388
<SHORT-TERM> 1,761,208
<LIABILITIES-OTHER> 539,553
<LONG-TERM> 204,875
<COMMON> 2,864,040
0
0
<OTHER-SE> 3,551,190
<TOTAL-LIABILITIES-AND-EQUITY> 78,886,254
<INTEREST-LOAN> 4,416,395
<INTEREST-INVEST> 658,360
<INTEREST-OTHER> 105,470
<INTEREST-TOTAL> 5,180,225
<INTEREST-DEPOSIT> 1,986,750
<INTEREST-EXPENSE> 2,068,605
<INTEREST-INCOME-NET> 3,111,620
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,894,103
<INCOME-PRETAX> 860,437
<INCOME-PRE-EXTRAORDINARY> 860,437
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 623,817
<EPS-PRIMARY> 2.19
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.94
<LOANS-NON> 1,634,269
<LOANS-PAST> 75,000
<LOANS-TROUBLED> 1,257,619
<LOANS-PROBLEM> 518,961
<ALLOWANCE-OPEN> (1,289,562)
<CHARGE-OFFS> 96,362
<RECOVERIES> (78,391)
<ALLOWANCE-CLOSE> (1,271,591)
<ALLOWANCE-DOMESTIC> (1,271,591)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 206,749
<PAGE>
</TABLE>
October 20, 1995
Dear Shareholder:
As you can see from the summary financial information, Abigail Adams National
Bancorp, Inc. continues to be a profitable entity. Adams reported record net
income of $624,000, or $2.19 per share, for the first nine months of 1995, for
an annualized return on average assets of 1.01%.
Management is highly regarded by the bank regulators. We have maintained our
well capitalized status (the top capital rating) with a total risk-based capital
ratio of 11.60%, Tier 1 risk-based capital ratio of 10.29% and a leverage
capital ratio of 7.84%. In addition to this strong capital base, we maintain an
"Outstanding" Community Reinvestment Act (CRA) rating and pay the lowest
possible FDIC insurance premiums.
While we take great satisfaction in these accomplishments, it is our seventeen
years of outstanding service to our customers in which we take the most pride.
Over the years, we have faithfully served the needs of our non-profit, small
business and commercial real estate customers, offering a high level of
personalized service without the bureaucracy of a large bank environment. We
appreciate our customers' business and value each as important.
Sincerely,
/s/ Barbara Davis Blum
Barbara Davis Blum
President and Chief Executive Officer
<PAGE>
Abigail Adams National Bancorp, Inc.
Balance Sheet
September 30, 1995
($ in thousands)
Assets:
Cash and due from banks $ 4,004
Short-term investments 817
Securities (market value of $14,293) 14,205
Loans 59,652
Less: Allowance
for loan losses (1,271)
------
Loans, net 58,381
Other assets 1,479
-----
Total assets $ 78,886
========
Liabilities and Equity:
Deposits $ 69,965
Short-term borrowings 1,761
Long-term debt 205
Other liabilities 540
-------
Total liabilities 72,471
Stockholders' equity 6,415
-----
Total liabilities and
stockholders' equity $ 78,886
========
Statement of Income
For the nine months ended September 30, 1995
($ in thousands)
Total interest income $ 5,180
Total interest expense 2,069
-----
Net interest income 3,111
Provision for loan losses --
-----
Net interest income after
provision for loan losses 3,111
Other income 643
Other expense 2,894
-----
Income before taxes 860
Applicable income tax expense 236
---
Net income $ 624
=======
Net income per share $ 2.19
=======
Selected Data
September 30, 1995
Allowance for loan losses as a
percentage of loans 2.13%
Average equity to average assets 7.36%
Return on average assets 1.01%
Net interest margin 5.37%
