SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
-----------------
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to __________
Commission file number 0-10971
-------
ABIGAIL ADAMS NATIONAL BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of small business issuer as specified in its charter)
Delaware 52-1508198
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1627 K Street, N.W., Washington, D.C. 20006
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(202) 466-4090
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $10.00 per share
- --------------------------------------------------------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period as 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
-- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year $7,755,000
----------
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock as of March 15, 1996.
$ 2,348,193
-----------
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of March 15, 1996.
284,844 shares of Common Stock, Par Value $10
Transitional Small Business Disclosure Format (Check one) Yes No X
--- ---
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Item 7. Financial Statements and Supplementary Data.
(Typographical corrections have been made to Footnotes #8 & #16)
ABIGAIL ADAMS NATIONAL BANCORP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report...............................................41
Consolidated Balance Sheets as of
December 31, 1995 and 1994...............................................42
Consolidated Statements of Operations for the
years ended December 31, 1995, 1994 and 1993.............................43
Consolidated Statements of Changes in Stockholders' Equity for
the years ended December 31, 1995, 1994 and 1993.........................45
Consolidated Statements of Cash Flows for the
years ended December 31, 1995, 1994 and 1993.............................46
Notes to Consolidated Financial Statements.................................48
40
<PAGE>
Independent Auditors' Report
The Board of Directors and Stockholders
Abigail Adams National Bancorp, Inc.
We have audited the accompanying consolidated balance sheets of Abigail Adams
National Bancorp, Inc. and subsidiary as of December 31, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Abigail Adams
National Bancorp, Inc. and subsidiary as of December 31, 1995 and 1994 and the
results of their operations and their cash flows for each of the years in the
three- year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Washington, D.C.
January 26, 1996
41
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Assets
Cash and due from banks (Note 2) $ 4,953,200 $ 4,349,250
Short-term investments:
Federal funds sold 9,475,000 1,300,000
Interest-bearing deposits in other banks 486,715 490,715
------- -------
Total short-term investments 9,961,715 1,790,715
Securities available for sale (Note 3) 5,508,406 6,009,025
Investment securities (market value of $8,309,265 and $8,838,874
for 1995 and 1994, respectively) (Note 3) 8,192,647 9,080,778
Loans (net of deferred fees and unearned discounts) (Notes 4 and 10) 63,592,395 60,729,437
Less: Allowance for loan losses (Note 4) (1,273,965) (1,289,562)
---------- ----------
Loans, net 62,318,430 59,439,875
Bank premises and equipment, net (Note 5) 277,517 369,218
Other assets (Note 8) 1,152,761 1,221,580
--------- ---------
Total assets $ 92,364,676 $ 82,260,441
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits (Notes 3 and 6):
Demand deposits $ 23,443,937 $ 19,677,159
NOW accounts 7,343,282 10,381,478
Money market accounts 21,391,814 17,850,822
Savings accounts 1,317,226 1,225,538
Certificates of deposit of $100,000 or greater 13,590,946 13,651,233
Certificates of deposit less than $100,000 15,975,990 12,507,272
---------- ----------
Total deposits 83,063,195 75,293,502
---------- ----------
Short-term borrowings (Note 10) 1,785,402 360,708
Long-term debt -- capital note (Note 9) 186,250 260,750
Other liabilities 710,963 583,211
------- -------
Total liabilities 85,745,810 76,498,171
---------- ----------
Stockholders' equity (Notes 9 and 12):
Common stock, par value $10 per share, authorized 800,000 shares;
issued 286,404 shares; outstanding 284,844 shares in 1995 and 1994 2,864,040 2,864,040
Additional paid-in capital 3,291,973 3,291,973
Retained earnings (deficit) 531,830 (284,646)
------- --------
6,687,843 5,871,367
Less: Treasury stock, 1,560 shares at cost (28,710) (28,710)
Less: Unrealized loss on securities, net of taxes (40,267) (80,387)
------- -------
Total stockholders' equity 6,618,866 5,762,270
--------- ---------
Total liabilities and stockholders' equity $ 92,364,676 $ 82,260,441
============= =============
</TABLE>
Commitments and contingent liabilities (Notes 7 and 11)
See accompanying notes to consolidated financial statements.
42
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fees on loans (Note 4) $ 5,902,325 $ 5,100,609 $ 4,412,001
Interest on securities available/held for sale:
U.S. Treasury 175,979 220,986 238,443
Obligations of U.S. government agencies 128,954 173,619 251,849
------- ------- -------
Total interest on securities available/held for sale 304,933 394,605 490,292
Interest and dividends on investment securities:
U.S. Treasury 69,417 45,055 --
Obligations of U.S. government agencies 413,396 373,813 379,806
Mortgage-backed securities 38,539 50,862 85,919
Other securities 32,460 11,774 32,549
------ ------ ------
Total interest and dividends on investment securities 553,812 481,504 498,274
Interest on short-term investments:
Federal funds sold 130,069 87,954 83,108
Bankers' acceptances -- -- 16,820
Deposits with other banks 22,920 18,025 12,573
------ ------ ------
Total interest on short-term investments 152,989 105,979 112,501
------- ------- -------
Total interest income 6,914,059 6,082,697 5,513,068
--------- --------- ---------
Interest expense:
Interest on deposits (Note 6):
NOW accounts 249,377 264,771 256,815
Money market accounts 812,916 544,798 418,340
Savings accounts 31,060 29,125 32,961
Certificates of deposit:
$100,000 or greater 698,356 525,099 421,563
Less than $100,000 845,681 492,134 341,275
-------- ------- ------- -------
Total interest on deposits 2,637,390 1,855,927 1,470,954
Interest on short-term borrowings:
Federal funds purchased and
repurchase agreements 88,871 57,131 16,502
Other short-term borrowings 6,364 3,382 --
----- -----
Total interest on short-term borrowings 95,235 60,513 16,502
Interest on capital note (Note 9) 13,969 18,028 20,445
------ ------ ------
Total interest expense 2,746,594 1,934,468 1,507,901
--------- --------- ---------
Net interest income 4,167,465 4,148,229 4,005,167
Provision for loan losses (Note 4) -- 221,572 175,000
------ ------- -------
Net interest income after provision for
loan losses 4,167,465 3,926,657 3,830,167
--------- --------- ---------
(Continued)
</TABLE>
43
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations (Continued)
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Other income:
Service charges on deposit accounts 737,059 696,829 669,242
Other income 103,712 93,837 191,040
Gain (loss) on securities transactions -- (281) 24,495
------ ---- ------
Total other income 840,771 790,385 884,777
------- ------- -------
Other expense:
Salaries and employee benefits 1,649,071 1,611,127 1,564,364
Occupancy and equipment expense (Notes 5 and 7) 698,570 750,359 674,341
Professional fees 353,205 887,347 480,860
Data processing fees 299,580 265,897 243,742
Other operating expense (Note 16) 781,000 1,386,444 1,140,578
------- --------- ---------
Total other expense 3,781,426 4,901,174 4,103,885
--------- --------- ---------
Income (loss) before taxes 1,226,810 (184,132) 611,059
Applicable income tax expense (Note 8) 267,912 -- --
------- ------ ------
Net income (loss) $ 958,898 $ (184,132) $ 611,059
=========== =========== ===========
Net income (loss) per common share $ 3.37 $ (0.65) $ 2.15
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
44
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1995, 1994 and 1993
<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 at January 1, 1993 $ 2,864,040 $ 3,291,973 $ (711,573) $ (28,710) $ --- $ 5,415,730
Net income --- --- 611,059 --- --- 611,059
---------- --------- -------- -------- ------- --------
Balance at December 31, 1993 2,864,040 3,291,973 (100,514) (28,710) --- 6,026,789
Net loss --- --- (184,132) --- --- (184,132)
Unrealized loss on securities,
net of taxes --- --- --- --- (80,387) (80,387)
--------- --------- -------- -------- -------- --------
Balance at December 31, 1994 2,864,040 3,291,973 (284,646) (28,710) (80,387) 5,762,270
Net income --- --- 958,898 --- --- 958,898
Dividends declared --- --- (142,422) --- --- (142,422)
Unrealized gain on securities,
net of taxes --- --- --- --- 40,120 40,120
--------- --------- ------- ------- ------- --------
Balance at December 31,1995 $ 2,864,040 $ 3,291,973 $ 531,830 $ (28,710) $ (40,267) $ 6,618,866
============ ============ ========= ========== ======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
45
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Operating Activities
Net income (loss) $ 958,898 $ (184,132) $ 611,059
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Provision for loan and other real estate losses -- 221,572 179,775
Depreciation, amortization and retirement
of bank premises and equipment 146,084 154,177 140,159
Loss (gain) on sale of securities -- 281 (24,495)
Loss on sale of other real estate -- 11,516 --
Accretion of loan discounts (106,116) (6,549) (184,412)
Amortization and accretion of discounts and
premiums on securities 19,097 33,226 61,779
Benefit (provision) for deferred income taxes (300,227) 254,046 (356,630)
Decrease (increase) in other assets 369,045 (444,958) 621,994
Increase (decrease) in other liabilities (11,874) (476,874) 684,933
------- -------- -------
Net cash provided (used) by operating activities 1,074,907 (437,695) 1,734,162
--------- -------- ---------
Investing Activities
Proceeds from repayment and maturity
of investment securities 1,888,400 800,000 5,314,450
Proceeds from maturity of securities
available/held for sale 10,000,000 6,750,000 3,950,000
Proceeds from repayment of mortgage-
backed securities 126,951 258,705 647,776
Proceeds from sale of securities -- 449,718 1,524,495
Purchase of investment securities (1,092,225) (1,758,334) --
Purchase of securities available/held for sale (9,485,625) (5,747,500) (8,889,403)
Net decrease (increase) in interest-bearing deposits
in other banks 4,000 -- (94,715)
Principal collected on loans 14,072,132 10,402,119 13,616,541
Loans originated (12,771,600) (16,665,764) (18,254,957)
Loans purchased from FDIC as receiver for other banks -- (493,086) (6,418,028)
Net decrease (increase) in short-term loans (96,137) (160,958) (9,000)
Net decrease (increase) in lines of credit (3,936,146) 754,607 (339,495)
Purchase of bank premises and equipment (54,383) (184,284) (44,499)
Proceeds from disposition of other real estate -- 716,984 --
-------- ------- ---------
Net cash used by investing activities (1,344,633) (4,877,793) (8,996,835)
---------- ---------- ----------
Financing Activities
Net increase (decrease) in transaction
and savings deposits 4,361,262 2,948,474 3,949,010
Proceeds from issuance of time deposits 40,745,855 34,897,519 45,663,732
Payments for maturing time deposits (37,337,424) (35,008,768) (38,003,294)
Net increase (decrease) in short-term borrowings 1,424,694 165,818 (1,400,110)
Payments on long-term debt (74,500) (56,250) (38,000)
Cash dividends paid to common stockholders (71,211) -- --
------- -------- --------
Net cash provided by financing activities 9,048,676 2,946,793 10,171,338
--------- --------- ----------
Increase (decrease) in cash and cash equivalents 8,778,950 (2,368,695) 2,908,665
Cash and cash equivalents at beginning of year 5,649,250 8,017,945 5,109,280
--------- --------- ---------
Cash and cash equivalents at end of year $ 14,428,200 $ 5,649,250 $ 8,017,945
============ =========== ===========
</TABLE>
46
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Supplementary disclosures:
Interest paid on deposits and borrowings $ 2,711,626 $ 1,924,179 $ 1,401,879
============= ============= ============
Income taxes paid $ 327,593 $ 511,250 $ 8,000
============= ============== =============
Securities transferred to investment
securities $ -- $ 3,500,000 $ --
============= ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
47
<PAGE>
ABIGAIL ADAMS NATIONAL BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1995 and 1994
1. Summary of Significant Accounting Policies
Abigail Adams National Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, The Adams National Bank (the "Bank"), prepare their financial
statements on the accrual basis and in conformity with generally accepted
accounting principles. The more significant accounting policies are
explained below. As used herein, the term the Company includes the Bank
unless the context otherwise requires.
(a) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and the Bank. All significant intercompany accounts and
transactions have been eliminated in consolidation.
(b) Cash and Cash Equivalents
The Company has defined cash and cash equivalents as those amounts
included in cash and due from banks and Federal funds sold.
(c) Securities
Management determines the appropriate classifications of securities at
the time of purchase. Securities which the Company has the ability and
the intent to hold until maturity are classified as investment
securities and reported at amortized cost. Securities bought and held
principally for the purpose of selling them in the near term are
classified as trading and reported at fair market value with
unrealized gains and losses included in earnings. Securities which are
not classified as trading or held to maturity are classified as
available for sale and are reported at fair value with unrealized
gains and losses reported as a separate component of stockholders'
equity. The unrealized loss on securities recognized had the effect of
decreasing the Company's stockholders' equity by approximately
$40,000, and $80,000, net of tax, at December 31, 1995 and 1994,
respectively. The Company does not maintain a trading account.
Premiums and discounts are amortized using a method which approximates
the interest method over the term of the security.
(d) Loans
Loans are stated at unpaid principal amount, net of unearned discount
and deferred loan fees and costs.
The Company discontinues the accrual of interest when the timely
collection of principal or interest is doubtful. Interest accruals are
resumed on such loans when they are brought fully current with respect
to interest and principal or when, in the judgment of management, the
loans have demonstrated a new period of performance and are estimated
to be fully collectible as to both principal and interest.
(e) Allowance for Loan Losses
The allowance for loan losses is a current estimate of the anticipated
losses in the present loan portfolio. The allowance is increased by
provisions charged to operating expenses and decreased by loan
charge-offs, net of recoveries. The allowance for loan losses is based
on management's evaluation of several factors, including loan loss
experience, composition and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans and current
economic trends and specific conditions that may effect the borrower's
ability to pay. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the
Company's allowance for loan losses. Such agencies may require the
Company to recognize additions to the allowance based on their
judgments about information available to them at the time of their
examination. Management believes that the current allowance for loan
losses is adequate to absorb losses that are inherent in the current
loan portfolio.
48
<PAGE>
(f) Loan Origination Fees and Costs
All fee income received from loan origination and purchases as well as
costs directly attributable to the loan origination are deferred. The
net deferred fees are amortized into interest income on loans as a
yield adjustment over the estimated life of the loan. Deferred fees
and costs are not amortized during periods in which interest income is
not being recognized because of concerns about the realization of loan
principal or interest. Discounts obtained on loans purchased from the
FDIC as receiver for other banks are considered credit discounts and
are not amortized into income until such time as a periodic credit
evaluation deems that the discount, or a portion thereof, is no longer
necessary or until such time as the loans have paid off. If the credit
evaluation deems all or some of the discount is no longer necessary,
it is then amortized into interest on loans as a yield adjustment over
the remaining estimated life of the loan.
(g) Depreciation
Depreciation of Bank premises and equipment is computed over the
estimated useful lives of the respective assets, ranging from three to
five years, on the straight-line basis. Leasehold improvements are
amortized on a straight-line basis over the estimated useful lives of
the respective assets or the terms of the respective leases, whichever
is shorter. Expenditures for major renewals and betterments of Bank
premises and equipment are capitalized at cost and those for
maintenance and repairs are charged to expense as incurred.
(h) Other real estate
Other real estate includes assets that have been acquired in
satisfaction of debt ("assets owned") and in-substance foreclosures.
Other real estate is recorded at the lower of cost or fair value. Any
valuation adjustments required at the date of transfer are charged to
the allowance for loan losses. Subsequent to acquisition, other real
estate is carried at the lower of its cost basis at foreclosure or
fair value less estimated selling costs, based upon periodic
evaluations.
(i) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(j) Net Income (Loss) Per Share
Net income (loss) per common share is calculated by dividing net
income (loss) by the weighted average number of common shares
outstanding during the year, 284,844 in 1995, 1994 and 1993.
(k) Fair Value Disclosures
In December, 1991 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 107, "Disclosures About
Fair Value of Financial Instruments" (SFAS No. 107). SFAS No. 107
requires entities to disclose the fair value of financial instruments,
both assets and liabilities recognized and not recognized in the
statement of financial position, for which it is practical to estimate
fair value. SFAS No. 107 is effective for the Company at December 31,
1995. The fair value of the Company's financial instruments is
reported in Note 18.
(l) Accounting by Creditors for Impairment of a Loan
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" (SFAS No. 114) and Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures" (SFAS No. 118) which
amended SFAS No. 114. SFAS No. 114 and SFAS No. 118 require creditors
to measure impaired loans in one of three ways: the present value of
expected future cash flows discounted at the loan's effective interest
rate, the loan's observable market price or the fair value of the
underlying collateral. If the measure of the impaired loan is less
than the recorded investment in the loan, the creditor shall recognize
the impairment by creating a valuation allowance with a corresponding
charge to expense. SFAS No. 114 and SFAS No. 118 were adopted by the
Company as of January 1, 1995. The adoption of SFAS No. 114 and SFAS
No. 118 did not have a material impact on the Company.
49
<PAGE>
(m) Derivative Financial Instruments
In October 1994, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments" (SFAS No. 119). SFAS No. 119 requires entities to
disclose the amount, nature and terms of all derivative financial
instruments, such as futures, forward, swap or option contracts, or
other financial instruments with similar characteristics, and to
separately disclose certain information about these instruments which
are held or issued for trading purposes and those which are held or
issued for purposes other than trading. SFAS No. 119 was adopted as of
January 1, 1995.
(n) Accounting for the Impairment of Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" (SFAS No. 121). SFAS No. 121 requires that assets to be
held and used be evaluated for impairment whenever events or
circumstances indicate that the carrying value may not be recoverable.
SFAS No. 121 also requires that assets to be disposed of be reported
at the lower of cost or fair value less selling costs. Implementation
of SFAS No. 121 is not expected to have a material impact on the
results of operations or financial position. SFAS No. 121 is effective
for the Company as of January 1, 1996.
(o) Accounting for Mortgage Servicing Rights
In May 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights" (SFAS No. 122). SFAS No. 122 provides accounting for
mortgage servicers that sell or securitize loans and retain servicing
rights. SFAS No. 122 is effective as of January 1, 1996. The Company
does not sell or securitize mortgage loans and therefore the
implementation of SFAS No. 122 will not have a material impact.
(p) Accounting for Stock Based Compensation
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock Based Compensation" (SFAS No. 123). SFAS No. 123 allows
companies either to continue to account for stock-based employee
compensation plans under existing accounting standards or to adopt a
fair-value- based method of accounting as defined in the new standard.
The Company will follow the existing accounting standards for these
plans, but will provide pro-forma disclosure of net income and
earnings per share as if the expense provisions of SFAS No. 123 had
been adopted.
(q) Risks and Uncertainties
The Company is subject to competition from other financial
institutions, and is also subject to the regulations of certain
federal agencies and undergoes periodic examination by those
regulatory authorities.
The financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial
statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period.
Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the allowance
for loan losses and the valuation of real estate acquired in
connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowances for loans losses
and other real estate, management periodically obtains independent
appraisals for significant properties.
(r) Reclassifications
Certain reclassifications have been made to amounts previously
reported in 1994 and 1993 to conform with the 1995 presentation.
2. Restrictions on Cash Balances
Included in cash and due from banks are balances maintained within the
Company to satisfy legally required reserves and to compensate for services
provided from correspondent banks. Balances maintained totaled $1,475,000
and $1,526,000 at December 31, 1995 and 1994, respectively. There were no
other withdrawal, usage restrictions or legally required compensating
balances at December 31, 1995 or 1994.
50
<PAGE>
3. Securities
Investment securities at December 31, 1995 and 1994 are summarized as
follows:
<TABLE>
<CAPTION>
1995
----------------------------------------------------------------
Gross Gross
Adjusted Unrealized Unrealized Market
Cost Basis Gains Losses Value
---------- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury:
Within one year $ 1,499,200 $ 1,581 $ -- $ 1,500,781
------------ ---------- ---------- ------------
Total 1,499,200 1,581 -- 1,500,781
------------ ---------- ---------- ------------
Obligations of U.S. government
agencies and corporations:
Within one year 1,005,685 9,627 -- 1,015,312
After one, but within five years 4,875,445 90,630 2,500 4,963,575
--------- ------ ----- ---------
Total 5,881,130 100,257 2,500 5,978,887
--------- ------- ----- ---------
Mortgage-backed securities:
Federal National Mortgage Association:
After one, but within five years 16,961 343 -- 17,304
Federal Home Loan Mortgage Corp.:
After five but within ten years 368,656 16,937 -- 385,593
------- ------ ----- -------
Total 385,617 17,280 -- 402,897
------- ------ ----- -------
Corporate securities (1) 12,500 -- -- 12,500
------ ----- ----- ------
Federal Reserve Bank Stock (1) 162,700 -- -- 162,700
------- ----- ----- -------
Federal Home Loan Bank Stock (1) 251,500 -- -- 251,500
------- ----- ----- -------
Total investment securities $ 8,192,647 $ 119,118 $ 2,500 $ 8,309,265
============ ========= ========== =============
</TABLE>
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------
Gross Gross
Adjusted Unrealized Unrealized Market
Cost Basis Gains Losses Value
---------- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury:
Within one year $ 987,423 $ -- $ 15,861 $ 971,562
After one, but within five years 496,767 -- 9,111 487,656
------- ------ ----- -------
Total 1,484,190 -- 24,972 1,459,218
--------- ----- ------ ---------
Obligations of U.S. government
agencies and corporations:
After one, but within five years 6,657,520 -- 215,935 6,441,585
--------- ----- ------- ---------
Total 6,657,520 -- 215,935 6,441,585
--------- ----- ------- ---------
Mortgage-backed securities:
Federal National Mortgage Association:
After one, but within five years 30,076 577 -- 30,653
Federal Home Loan Mortgage Corp.:
After five but within ten years 482,292 952 2,526 480,718
------- --- ----- -------
Total 512,368 1,529 2,526 511,371
------- ----- ----- -------
Corporate securities (1) 12,500 -- -- 12,500
------ ----- ----- ------
Federal Reserve Bank Stock (1) 162,700 -- -- 162,700
------- ----- ----- -------
Federal Home Loan Bank Stock (1) 251,500 -- -- 251,500
------- ------ ------- -------
Total investment securities $9,080,778 $ 1,529 $ 243,433 $8,838,874
========== ======== ========= ==========
</TABLE>
(1) Corporate securities and Federal Reserve Bank and Federal Home Loan Bank
Stocks have no stated maturities.
51
<PAGE>
Securities available for sale at December 31, 1995 and 1994 are summarized
below:
<TABLE>
<CAPTION>
1995
--------------------------------------------------------------
Gross Gross
Adjusted Unrealized Unrealized Market
Cost Basis Gains Losses Value
---------- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury:
Within one year $ 1,995,654 $ 6,220 $ -- $ 2,001,874
----------- ----- -------- -----------
Total 1,995,624 6,220 -- 2,001,874
--------- ----- -------- ---------
Obligations of U.S. government
agencies and corporations:
Within one year 2,501,562 1,249 -- 2,502,811
After one, but within five years 1,000,000 3,721 -- 1,003,721
--------- ----- ------- ---------
Total 3,501,562 4,970 -- 3,506,532
--------- ----- ------ ---------
Total securities available for sale $ 5,497,216 $ 11,190 $ -- $ 5,508,406
=========== ======== ======= ===========
</TABLE>
<TABLE>
<CAPTION>
1994
-----------------------------------------------------------------
Gross Gross
Adjusted Unrealized Unrealized Market
Cost Basis Gains Losses Value
---------- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury:
Within one year $ 3,024,521 $ -- $ 7,646 $ 3,016,875
----------- ------- ------- -----------
Total 3,024,521 -- 7,646 3,016,875
--------- ------- ----- ---------
Obligations of U.S. government
agencies and corporations:
Within one year 2,998,757 -- 6,607 2,992,150
--------- ------ ----- ---------
Total 2,998,757 -- 6,607 2,992,150
--------- ------ ----- ---------
Total securities available for sale $ 6,023,278 $ -- $ 14,253 $ 6,009,025
=========== ======== ======== ===========
</TABLE>
Securities in the amount of approximately $8,616,000 and $11,925,000 were
pledged to collateralize public deposits and repurchase agreements at
December 31, 1995 and 1994, respectively.
The Company had no securities exempt from federal taxation during 1995 and
1994 or any securities whose book value as to any single issuer exceeded
10% of stockholders' equity.
4. Loans
Loans at December 31, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Commercial and industrial $ 43,547,303 $ 42,960,687
Real estate - mortgages 14,150,578 11,074,167
Real estate - construction and development 2,617,836 3,237,156
Installment to individuals 3,652,022 3,816,083
--------- ---------
63,967,739 61,088,093
Less: Deferred income and unearned discounts (375,344) (358,656)
-------- --------
Total $ 63,592,395 $ 60,729,437
============ ============
</TABLE>
52
<PAGE>
Loan concentrations at December 31, 1995 and 1994 are summarized as
follows:
1995 1994
---- ----
Service industry 38% 34%
Real estate development/finance 32% 32%
Wholesale/retail 21% 21%
Other 9% 13%
-- --
Total 100% 100%
=== ===
A substantial portion, $41,418,000, or approximately 65%, at December 31,
1995, and $41,862,000, or approximately 69%, at December 31, 1994, of the
Company's loans are secured by real estate in the Washington, D.C.
metropolitan area. Accordingly, the ultimate collectibility of a
substantial portion of the Company's loan portfolio is susceptible to
changes in market conditions in the Washington metropolitan area.
Transactions in the allowance for loan losses for the years ended December
31, 1995 and 1994 are summarized as follows:
1995 1994 1993
---- ---- ----
Balance at January 1 $ 1,289,562 $ 1,385,875 $ 1,320,487
Provision for loan losses -- 221,572 175,000
Recoveries 97,993 156,374 97,552
Loans charged off (113,590) (474,259) (207,164)
-------- -------- --------
Net charge-offs (15,597) (317,885) (109,612)
------- -------- --------
Balance at December 31 $ 1,273,965 $ 1,289,562 $ 1,385,875
=========== =========== ===========
Included in the accompanying consolidated balance sheets are certain loans
that are accounted for on a nonaccrual basis. These nonaccrual loans
totaled approximately $1,561,000, $1,244,000 and $1,733,000 at December 31,
1995, 1994 and 1993, respectively. Had the loans been current in accordance
with their original terms, gross interest income for these loans would have
been $212,000, $150,000 and $154,000 in 1995, 1994 and 1993, respectively.
Actual recorded interest income on these loans was $40,000, $53,000 and
$82,000 in 1995, 1994 and 1993, respectively. Nonaccrual loans include
$875,000, $1,013,000 and $1,151,000 in loans guaranteed by the U.S. Small
Business Administration at December 31, 1995, 1994 and 1993, respectively.
These loans are guaranteed for an average of 84.9% of the outstanding
balance, or $743,000, 87.3% of the outstanding balance, or $884,000, and
77.4% of the outstanding balance, or $891,000 at December 31, 1995, 1994
and 1993, respectively. Also included in the accompanying consolidated
balance sheets are $1,245,000, $1,301,000 and $1,502,000 in loans at
December 31, 1995, 1994 and 1993, respectively, restructured due to a
deterioration in the financial condition of the borrowers. Actual interest
income recorded subsequent to the date of restructuring on loans reported
as restructured at each year-end was $124,000, $110,000 and $148,000 in
1995, 1994 and 1993, respectively. As of year-end 1995, 1994 and 1993,
these loans were performing in accordance with the restructured terms.
Nonaccrual loans at December 31, 1995 and 1994 include $0 and $826,000 in
loans which were reported as restructured as of the prior year-end. The
Company had no commitments to lend additional funds to any of the borrowers
whose loans are recorded as nonaccrual or restructured at December 31,
1995, 1994 and 1993. At December 31, 1995, 1994 and 1993, the Company had
$6,000, $3,000 and $89,000, respectively, in loans greater than 90 days
delinquent which were still accruing. These loans consisted primarily of
loans which were both adequately secured and in the process of collection.
53
<PAGE>
At December 31, 1995, the recorded investment in impaired loans was
$2,790,000, substantially all of which are on nonaccrual status or are
reported as restructured loans. Included in this amount is $1,631,000 of
impaired loans for which the related impairment allowance is $416,000 and
$1,037,000 of loans that do not have an impairment allowance. The average
recorded investment in impaired loans during 1995 was $2,918,000. The
amount of interest income recognized on impaired loans during the year
ended December 31, 1995 has been disclosed above in the discussion of
nonaccrual and restructured loans. The allowance for credit losses contains
additional amounts for impaired loans as deemed necessary to maintain
allowances at levels considered adequate by management.
The Company has engaged in banking transactions in the ordinary course of
business with some of its directors, officers, principal shareholders and
their associates. Management believes that all loans or commitments to
extend loans and the payment of overdrafts included in such transactions
are made on the same terms, including interest rates and collateral, as
those prevailing at the time of comparable loans with other persons and do
not involve more than the normal risk of collectibility. At December 31,
1995 and 1994, none of these loans are either reported as nonaccrual,
restructured or classified. The aggregate amount of loans to related
parties for the years ended December 31, 1995 and 1994 was as follows:
1995 1994
---- ----
Balance at January 1 $ 726,153 $ 472,447
Additions 481,774 668,102
Repayments (675,350) (260,594)
Terminations -- (153,802)
------- --------
Balance at December 31 $ 532,577 $ 726,153
========== ==========
5. Bank Premises and Equipment
Bank premises and equipment at December 31, 1995 and 1994 is summarized as
follows:
1995 1994
---- ----
Furniture, fixtures and equipment 1,351,454 $ 1,311,979
Leasehold improvements 692,936 678,028
------- -------
Total, at cost 2,044,390 1,990,007
Less: Accumulated depreciation and amortization (1,766,873) (1,620,789)
---------- ----------
Total, net $ 277,517 $ 369,218
=========== ==========
Amounts charged to operating expenses for depreciation and amortization
aggregated approximately $146,000, $154,000 and $140,000 in 1995, 1994 and
1993, respectively.
6. Interest-Bearing Deposits
Related party deposits totaled approximately $2,481,000 and $610,000 at
December 31, 1995 and 1994, respectively. In management's opinion, rates
paid on these deposits, where applicable, are available to others at the
same terms.
At December 31, 1995 and 1994, brokered deposits totaled approximately
$7,090,000 and $3,135,000, respectively.
7. Leasing Arrangements
The Company leases its main office space under two leases which expire in
2002. The Company also leases space for two branch offices and two
automated teller machines. The lease on the M Street branch expires in
1996, and the leases on the Union Station branch and the two automated
teller machines expire in 1999. All leases are classified as operating
leases.
54
<PAGE>
The following is a schedule of future minimum payments under operating
leases that have initial or remaining noncancelable lease terms in excess
of one year as of December 31, 1995:
Lease
Payments
--------
1996 $ 398,114
1997 386,340
1998 383,676
1999 324,756
2000 322,742
2001 and thereafter 591,694
Rental expense in 1995, 1994 and 1993 was approximately $408,000, $452,000,
$392,000, respectively.
8. Income Taxes
Income tax expense attributable to income from continuing operations for
1995, 1994 and 1993 consists of:
1995 1994 1993
---- ---- ----
Current:
Federal $ 428,452 $ (167,026) $ 289,174
District of Columbia 139,687 (87,020) 67,456
------- ------- ------
568,139 (254,046) 356,630
------- -------- -------
Deferred:
Federal (160,540) 167,026 (289,174)
District of Columbia (139,687) 87,020 (67,456)
-------- ------ -------
(300,227) 254,046 (356,630)
-------- ------- --------
Total:
Federal 267,912 -- --
District of Columbia -- -- --
------- ------- -------
$ 267,912 $ -- $ --
========= ======== ========
Income tax expense differed from the amounts computed by applying the U.S.
Federal income tax rate of 34 percent to pretax income from continuing
operations as a result of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Tax expense at statutory rate $ 417,116 34.0% $(62,605) (34.0)% $207,760 34.0%
Increase (decrease) in taxes
resulting from District of
Columbia franchise tax, net
of Federal tax effect 124,952 10.2 (31,583) (17.2) 16,708 2.7
Other 37,235 3.0 2,550 1.4 -- --
Change in beginning of year
valuation allowance (311,391) (25.4) 91,638 49.8 224,468) (36.7)
-------- ----- ------ ---- -------- -----
$ 267,912 21.8% $ -- 0.0% $ -- 0.0%
========= ==== ====== === =========== ===
</TABLE>
55
<PAGE>
The significant components of deferred income tax expense attributable to
income from continuing operations for the year ended December 31, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax benefit (exclusive of the
effects of other components listed below) $ 11,164 $ 162,409
Increase (decrease) in beginning of the year
balance of the valuation allowance
for deferred tax assets (311,391) 91,637
-------- ------
$ (300,227) $ 254,046
========== ========
</TABLE>
The following is a summary of the tax effects of temporary differences that
give rise to significant portions of the deferred tax assets and deferred
tax liabilities at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Book allowance for loan losses $519,332 $ 525,690
Interest income on nonaccrual loans, due to accrual for tax purposes 51,401 51,401
Deferred loan fees, due to cash basis for tax purposes 76,344 97,136
Furniture and equipment, principally due to differences in depreciation 101,962 91,266
Unrealized losses on securities 26,778 55,298
Compensated absences, principally due to cash basis
for financial reporting purposes 8,184 7,005
Other -- 20,401
------ ------
Total gross deferred tax assets 784,001 848,197
Less: Valuation allowance -- (311,391)
----- --------
Net deferred tax assets 784,001 536,806
Deferred tax liabilities:
Tax allowance for loan losses (321,737) (332,806)
Prepaid expenses due to cash basis for tax purposes (19,513) (20,987)
------- -------
Total gross deferred tax liabilities (341,250) (353,793)
-------- -------
Net deferred tax assets $ 442,751 $ 183,013
========= =========
</TABLE>
The Company had established a valuation allowance through December 31, 1994
for the excess of deferred tax assets over taxes paid in the carryback
years and future reversals of certain existing taxable temporary
differences. As of December 31, 1995, all deferred tax assets were
recoverable through taxes paid in the carryback years and therefore no
valuation allowance was required.
At December 31, 1995, the Company had utilized all of its available
financial statement net operating loss carryforwards. Deferred income tax
assets at December 31, 1995 and 1994 were $442,751 and $183,013,
respectively, and are included in other assets in the accompanying
financial statements. Also included in other assets at December 31, 1995
and 1994, were current tax receivables of $54,000 and $429,000,
respectively.
9. Long-Term Debt -- Capital Note
On February 2, 1988, the Bank renegotiated its subordinated capital note
agreement with Minbanc Capital Corp. The principal balance of this note
shall be repaid in 16 quarterly installments of $9,500 each commencing on
September 30, 1990 through June 30, 1994 and thereafter 16 quarterly
installments of $18,625 through the note's maturity on June 30, 1998. The
rate of interest payable on the principal balance of this note was
initially fixed at 6.50%. On June 30, 1989 and annually thereafter, the
interest rate adjusts to the equivalent of 2% under the rate of the most
recently auctioned ten year United States Treasury Note. The note carries a
minimum rate of 6.00% and a maximum rate of 12% per annum. As of December
31, 1995, the note carried an interest rate of 6.00%. Annual principal
maturities as of December 31, 1995 are as follows:
1996 $ 74,500
1997 74,500
1998 37,250
------
$186,250
========
56
<PAGE>
The note agreement restricts the total cash dividends which may be paid by
the Bank in any twelve calendar month period to 25% of net operating
income.
10. Short-term Borrowings
Short-term borrowings consist primarily of Federal funds purchased and
securities sold under repurchase agreements. Federal funds purchased
represent overnight funds, while securities sold under repurchase
agreements generally involve the receipt of immediately available funds
which mature in one business day or roll over under a continuing contract.
The balance of securities sold under repurchase agreements at December 31,
1995 and 1994 of $1,785,402 and $360,708, respectively, represents funds
received by the Company for securities sold to customers of the Company, at
the customer's request, which mature in one business day but roll over
under a continuing contract. In accordance with these contracts, the
underlying securities sold are U.S. Treasuries or government agencies which
are segregated from the Company's other investment securities in the Bank's
Federal Reserve Bank account. The book value of the underlying securities
sold under these repurchase agreements at December 31, 1995 and 1994 was
approximately $2,060,000 and $1,196,000, respectively. The market value of
these same securities at December 31, 1995 and 1994 was $2,094,000 and
$1,159,000, respectively. At maturity, the same security is repurchased by
the Company.
Repurchase agreements are entered into with related parties in the normal
course of business. At December 31, 1995, such related party repurchase
agreements totalled approximately $500,000. In management's opinion, rates
paid on these repurchase agreements are available to others at the same
terms.
In the normal course of business, there are securities sold under
repurchase agreements that the Company initiates with correspondent banks
for liquidity purposes. As with the customer repurchase agreements, these
contracts generally involve the receipt of immediately available funds
which mature in one business day or roll over under a continuing contract,
however, the underlying securities sold are transferred to the
correspondent bank's Federal Reserve Bank account until maturity. At
maturity, the same security is repurchased by the Company.
Other short-term borrowings during 1995 and 1994 consist of borrowings from
the Federal Home Loan Bank of Atlanta ("FHLB") for liquidity purposes.
Borrowings are collateralized by loans secured by first liens on one to
four family, multifamily and commercial mortgages as well as investment
securities. Although no FHLB borrowings are outstanding at December 31,
1995 and 1994, the outstanding balance of loans pledged at December 31,
1995 and 1994 to collateralize future borrowings from the FHLB were
$3,194,000 and $2,719,000. The collateral value of the loans pledged at
December 31, 1995 and 1994 was $2,127,000 and $2,150,000, respectively.
Short-term borrowings for 1995 and 1994 are summarized below:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Federal funds purchased
Balance at end of year $ -- $ --
Daily average balance outstanding during year 89,114 63,219
Maximum balance outstanding as of any month-end during year 850,000 1,000,000
Daily average interest rate during year 5.34% 4.68%
Securities sold under repurchase agreements
Balance at end of year $ 1,785,402 $ 360,708
Daily average balance outstanding during year 1,510,954 1,484,991
Maximum balance outstanding as of any month-end during year 3,217,340 3,987,421
Daily average interest rate during year 5.57% 3.65%
Average interest rate on balance at end of year 4.92% --
Other short-term borrowings
Balance at end of year $ -- $ --
Daily average balance outstanding during year 103,493 61,370
Maximum balance outstanding as of any month-end during year 1,200,000 1,100,000
Daily average interest rate during year 6.15% 5.56%
</TABLE>
57
<PAGE>
11. Commitments and Contingent Liabilities
In the normal course of business, there are various outstanding commitments
and contingent liabilities such as commitments to extend credit that are
not reflected in the accompanying consolidated financial statements. No
material losses are anticipated as a result of these transactions. At
December 31, 1995 and 1994, the Company had outstanding letters of credit
aggregating approximately $706,000 and $474,000, commitments to originate
variable rate loans aggregating approximately $13,867,000 and $13,315,000,
and commitments to originate fixed rate loans aggregating approximately
$1,410,000 and $452,000, respectively.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements. The Company
evaluates each customer's creditworthiness on a case by case basis. The
amount of collateral obtained if deemed necessary by the Company upon
extension of credit is based on management's credit evaluation. Collateral
held varies but may include accounts receivable, inventory, property, plant
and equipment, and residential and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support lease and security deposits and
private borrowing arrangements. The credit risk involved in issuing letters
of credit is essentially the same as that involved in extending loan
facilities to customers. The Company holds cash, marketable securities and
other collateral supporting those commitments for which collateral is
deemed necessary. The portion of letters of credit which are collateralized
was 100% at December 31, 1995 and 1994.
Under the terms of an employment agreement with the President and Chief
Executive Officer of the Company and the Bank, the Company is obligated to
make payments to her under certain conditions, in the event her employment
is terminated.
Under the terms of severance agreements with seven key management officials
of the Bank, the Bank is obligated to make payments totaling $504,000 under
certain conditions in the event of a change in control of the Company or
the Bank.
The Company maintains directors' and officers' liability insurance in the
amount of $2,000,000, subject to certain exclusions. In addition, according
to the by-laws, the Company is obligated to indemnify any director or
officer for losses incurred to the full extent authorized or permitted by
Delaware general corporation law.
12. Restrictions on Dividend Payments and Loans by Affiliated Bank
Any dividends payable by the Company are dependent on dividends payable
from the Bank to the Company. Federal banking laws restrict the total
dividend payments that a national banking association may make during any
calendar year to the total net income of the bank for current year plus
retained net income for the preceding two years, except with the prior
written approval of the Office of the Comptroller of the Currency. As a
result of additional dividend restrictions referred to in Note 9 above, the
Bank is restricted from making dividend payments in excess of 25% of net
operating income in any twelve calendar month period. The Federal Reserve
Board has issued a statement effective November 14, 1985 which indicates
that dividends should only be paid out of net income available to common
shareholders over the past year. Restrictions are also imposed upon the
ability of the Bank to make loans to the Company, purchase stock in the
Company or use the Company's securities as collateral for indebtedness of
the Bank.
13. Parent Company Information
On April 1, 1982, the Company acquired, through merger, all of the
outstanding shares of the Bank, becoming the parent and sole stockholder.
The earnings (losses) of the Bank are recorded by the Company using the
equity method of accounting. Earnings (losses) are recorded as an increase
(decrease) in the Company's investment, and dividends declared by the Bank
are recorded as reductions in the Company's investment in the Bank.
58
<PAGE>
Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31,
------------
1995 1994
---- ----
<S> <C> <C>
Assets
Due from banks and interest-bearing balances with subsidiary bank $ 248,797 $ 169,768
Investment in subsidiary bank 6,364,594 5,684,937
Dividend receivable from subsidiary bank 71,211 --
Other assets 8,459 4,438
----- -----
Total assets $ 6,693,061 $ 5,859,143
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Other liabilities $ 74,195 $ 96,873
Stockholders' equity:
Common stock, par value $10 per share, authorized 800,000 shares; issued
286,404 shares; outstanding 284,844 shares
in 1995 and 1994 2,864,040 2,864,040
Additional paid-in capital 3,291,973 3,291,973
Retained earnings (deficit) 491,563 (365,033)
------- --------
6,647,576 5,790,980
Less: Treasury Stock, 1,560 shares at cost (28,710) (28,710)
------- -------
Total stockholders' equity 6,618,866 5,762,270
--------- ---------
Total liabilities and stockholders' equity $ 6,693,061 $ 5,859,143
=========== ===========
</TABLE>
Condensed Statements of Operations
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income:
Dividends from subsidiary bank $213,633 $ -- $ --
Interest earned on balances with subsidiary bank 4,906 6,162 7,004
Interest on securities available for sale -- 7,518 8,722
Interest on other -- (281) 6,750
Management fees earned from subsidiary bank 444 31,880 12,649
--- ------ ------
Total income 218,983 45,279 35,125
Expenses:
Professional fees 125,569 433,641 32,882
Organizational and other 75,046 157,315 109,854
------ ------- -------
Total expenses 200,615 590,956 142,736
Income (loss) before taxes and equity
in undistributed net income of subsidiary 18,368 (545,677) (107,611)
Applicable income tax benefit 300,993 -- --
------- ------ ------
Income (loss) before equity
in undistributed net income of subsidiary 319,361 (545,677) (107,611)
Equity in undistributed net income of subsidiary 639,537 361,545 718,670
------- ------- -------
Net income (loss) $958,898 $ (184,132) $ 611,059
======== ========== =========
</TABLE>
59
<PAGE>
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Operating Activities
Net income (loss) $ 958,898 $ (184,132) $ 611,059
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Equity in undistributed loss (net income) of subsidiary (639,537) (361,545) (718,670)
Dividends declared from subsidiary bank not received (71,211)
Other, net (97,910) 94,102 (1,064)
------- ------ ------
Net cash provided (used) by operating activities 150,240 (451,575) (108,675)
Investing Activities
Proceeds from maturity of securities available for sale -- 450,000 --
Proceeds from maturity of investment securities -- -- 900,000
Purchase of securities -- -- (900,000)
---- ------- -------
Net cash provided by investing activities -- 450,000 --
Financing Activities
Cash dividends paid to stockholders (71,211) -- --
------- ------ -------
Net cash used by financing activities (71,211) -- --
------- ------ -------
Increase (decrease) in cash 79,029 (1,575) (108,675)
Cash and cash equivalents at beginning of year 169,768 171,343 280,018
------- ------- -------
Cash and cash equivalents at end of year $ 248,797 $ 169,768 $ 171,343
========= =========== ===========
</TABLE>
14. Federal Deposit Insurance Corporation Improvement Act
Regulations implementing the prompt corrective action provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
became effective on December 19, 1992. FDICIA requires the regulators to
stratify institutions into five quality tiers based upon their respective
capital strengths and to increase progressively the degree of regulation
over the weaker institutions, limits the pass-through deposit insurance
treatment of certain types of accounts, adopts a "Truth in Savings"
program, calls for the adoption of risk-based premiums on deposit insurance
and requires banks to observe insider credit underwriting procedures no
less strict than those applied to comparable noninsider transactions.
The prompt corrective action regulations define specific capital categories
based on an institution's capital ratios. The capital categories, in
declining order, are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized." Institutions categorized as "undercapitalized" or below
are subject to certain restrictions, including the requirement to file a
capital plan with its primary federal regulator, prohibitions on the
payment of dividends and management fees, restrictions on executive
compensation and increased supervisory monitoring, among other things.
Other restrictions may be imposed on the institution either by its primary
federal regulator or by the FDIC, including requirements to raise
additional capital, sell assets or sell the entire institution. Once an
institution becomes "critically undercapitalized" it is generally placed in
receivership or conservatorship within 90 days.
To be considered "well capitalized," an institution must generally have a
leverage ratio of at least 5%, a Tier 1 risk-based capital ratio of at
least 6% and a total risk-based capital ratio of at least 10%. At December
31, 1995 and 1994, both the Company and the Bank were considered "well
capitalized."
60
<PAGE>
15. Employee Benefits
The Company has adopted a Nonqualified Stock Option Plan for certain
officers and key employees and has reserved 30,000 shares of common stock
for options to be granted under the plan. No options have been granted to
date.
The Company has a 401(k) plan covering all full-time employees. The Company
made contributions to the plan of $34,000, $40,000 and $24,000 in 1995,
1994 and 1993, respectively. These amounts are included in salaries and
employee benefits in the accompanying consolidated statements of
operations.
On January 23, 1996, the Company adopted a nonqualified Directors Stock
Option Plan (the "Directors Plan") and a qualified Employee Incentive Stock
Option Plan covering key employees (the "Employee Plan"), subject to
shareholder approval. Shares subject to options under these plans may be
authorized but unissued shares or treasury shares. Options under the
Directors Plan are granted at a price not less than 85% of the fair market
value of the Company's common stock on the date of grant. The options vest
beginning in 1996 at an annual rate of 20% at the end of each year and
become fully vested in the event of a Change in Control, as defined in the
Directors Plan, or in the event that the Director leaves the Board. Options
under the Employee Plan are granted at a price of 100% of the fair market
value of the Company's common stock on the date of grant and are
immediately exercisable. Options under both plans expire not later than ten
years after the date of grant. Options for a total of 5,472 shares of
common stock available for grant under the above Plans were granted at a
price of $20.21 for directors and $23.78 for employees. No options have
been exercised under these plans.
16. Other Operating Expense
Other operating expenses for 1995, 1994 and 1993 are summarized as follows:
1995 1994 1993
---- ---- ----
FDIC insurance premiums $ 84,607 $ 171,582 $ 154,107
Courier service and bank security 149,689 148,884 131,229
Stationery and office supplies 75,585 103,017 71,542
Employment litigation expense -- 387,000 250,000
Other 471,119 575,961 533,700
------- ------- -------
Total other operating expense $ 781,000 $ 1,386,444 $ 1,140,578
========= =========== ===========
The Company has engaged in transactions in the ordinary course of business
with some of its directors, officers, principal stockholders and their
associates. Management believes that all such transactions are made on the
same terms as those prevailing at the time with other persons. The Company
expensed $15,000, $32,000 and $27,000 during 1995, 1994 and 1993,
respectively, to such related parties in connection with public relations
activities. The Company expensed $17,000 to such related parties for legal
services during 1995.
17. Shareholder Rights Plan
On April 12, 1994, the Board of Directors of the Company adopted a Rights
Agreement ("Rights Agreement"), which was amended April 20, 1995. Pursuant
to the Rights Agreement, the Board of Directors of the Company declared a
dividend of one share purchase right for each share of the Company's common
stock outstanding on April 25, 1994 ("Right"). Among other things, each
Right entitles the holder to purchase one share of the Company's common
stock at an exercise price of $60.33.
Subject to certain exceptions, the Rights will be exercisable if a person
or group of persons acquires 25% or more of the Company's common stock
("Acquiring Person"), or announces a tender offer, the consummation of
which would result in ownership by a person or group of persons of 25% or
more of the common stock, or if the Board determines that a person or group
of persons holding 15% or more of the Company's common stock is an Adverse
Person, as defined in the Rights Agreement.
61
<PAGE>
Upon the occurrence of one of the triggering events, all holders of Rights,
except the Acquiring Person or Adverse Person, would be entitled to
purchase the Company's common stock at 50% of the market price. If the
Company is acquired in a merger or business combination, each holder of a
Right would be entitled to purchase common stock of the Acquiring Person at
a similar discount.
The Board of Directors may redeem the Rights for $0.01 per share or amend
the Plan at any time before a person becomes an Acquiring Person. The
Rights expire on December 31, 2003.
18. Fair Value of Financial Instruments
During 1995, the Company adopted Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments"
(SFAS No. 107), which requires the disclosure of fair value information
about financial instruments, whether or not recognized in the balance
sheet, for which it is practicable to estimate that value. Quoted market
prices, when available, are used as the measure of fair value. In cases
where quoted market prices are not available, fair values are based on
present value estimates or other valuation techniques. These derived fair
values are estimates at a specific point in time and are significantly
affected by assumptions used, principally the timing of future cash flows
and the discount rate. Because assumptions are inherently subjective in
nature, the estimated fair values cannot be substantiated by comparison to
independent market quotes and, in many cases, the estimated fair values
would not necessarily be realized in an immediate sale or settlement of the
instrument. The disclosure requirements of SFAS No. 107 exclude certain
financial instruments and all nonfinancial instruments. The estimated fair
values presented do not give effect to the values associated with the
Company's banking business, existing customer relationships, branch
network, property or equipment. Also, under SFAS No. 107, the fair value of
noninterest bearing demand deposits, savings and NOW accounts and money
market deposit accounts is equal to the carrying amount because these
deposits have no stated maturity. This approach to estimating fair value
excludes the significant benefit that results from the low-cost funding
provided by such deposit liabilities, as compared to alternative sources of
funding. Accordingly, the aggregate fair value amounts presented do not
represent management's estimation of the underlying value of the Company.
SFAS No. 119 amended SFAS No. 107 for disclosure purposes. The amendments
require that the disclosures distinguish between financial instruments held
for trading purposes, measured at fair value with gains and losses
recognized in earnings, and financial instruments held or issued for
purposes other than trading. The fair value of derivative financial
instruments must be disclosed separately from non-derivative financial
instruments. The Company does not hold any financial instruments for
trading purposes and does not have any material derivative financial
instruments.
The following are the estimated fair values of the Company's financial
instruments at December 31, 1995 followed by a general description of the
methods and assumptions used to estimate such fair values.
Carrying Estimated
Amount Value
Financial assets:
Cash $ 4,953,200 $ 4,953,200
Short-term investments 9,961,715 9,961,715
Securities available for sale 5,508,406 5,508,406
Investment securities 8,192,647 8,309,265
Loans 63,592,395
Less: Allowance for loan losses (1,273,965)
----------
Net loans 62,318,430 62,145,121
Financial liabilities:
Noninterest-bearing deposits 23,443,937 23,443,937
Interest -bearing deposits
with no stated maturity 30,052,322 30,052,322
Time deposits 29,566,936 29,101,285
Short-term borrowings 1,785,402 1,785,402
Long-term debt 186,250 186,250
62
<PAGE>
The following methods and assumptions were used by the Company in
estimating the fair value of its financial instruments:
Cash and due from banks. The carrying amounts reported in the balance
sheet approximate fair value due to the short- term nature of these
assets.
Short-term investments. The carrying amounts of short-term investments
on the balance sheet with maturities of 90 days or less approximate
fair value. For short-term investments with maturities of greater than
90 days, fair value estimates are based on market quotes for similar
instruments adjusted for such differences between the quoted
instruments and the instruments being valued as to maturity and credit
quality.
Securities Available for Sale and Investment Securities. The estimated
fair values of securities by type are based on quoted market prices,
when available. If a quoted market price is not available, fair value
is estimated using quoted market prices for similar securities.
Loans. Fair values are estimated for portfolios of loans with similar
financial characteristics. Loans are classified by variable rate,
fixed rate and loans which reprice on a predetermined schedule.
Non-variable rate loans are further classified by general purpose
within the commercial, real estate and consumer portfolios. Loans are
further classified by performing or nonperforming loans.
For performing variable-rate loans which reprice immediately as market
rates change, the carrying amounts approximate fair value.
Additionally, most variable rate lines of credit, which comprise more
than half of the variable loan portfolio, are reviewed and extended on
at least an annual basis. At the time of that review, these loans are
repriced to reflect the current credit risk inherent in these loans.
For performing fixed-rate loans and loans which reprice on a
pre-determined schedule, fair values are estimated by discounting the
expected cash flows up to and including the date of repricing, if
applicable, by a discount rate that reflects the interest rate and
credit risk inherent in the loan. The estimated maturity of these
loans reflects both contractual maturity and management's assessment
of prepayments, economic condition, and other factors that may affect
the maturity of the portfolio. The discount rate is based on the rate
that would be currently offered for loans with similar terms to
borrowers of similar credit quality.
Nonperforming loans are included in each of the loan portfolios
previously described. The fair value of nonperforming loans is
estimated in a manner which approximates discounting the expected
return of principal over the period of time the Company anticipates
receiving principal payments on the loan at a discount rate which is
reflective of the higher risk surrounding these assets compared to a
performing loan.
Deposits. The fair value of deposits with no stated maturity, such as
noninterest-bearing deposits, NOW accounts, savings and money market
deposit accounts, is the amount payable on demand as of year-end. For
time deposits, fair value is estimated by discounting the contractual
cash flows using a discount rate equal to the incremental deposit rate
for similar remaining maturities.
Short-term borrowings. The carrying values of federal funds purchased,
securities sold under agreements to repurchase and other short-term
borrowings approximate fair values.
Long-term debt. The fair values of long-term debt and other borrowings
are estimated by discounting the contractual cash flows for each
instrument. The discount rate applied is based on the current
incremental borrowing rates for similar arrangements with similar
maturities.
Commitments to extend credit and letters of credit. The Company has
commitments to extend credit of $15,277,000 and letters of credit of
$706,000. Pricing of these financial instruments is based on the
credit quality and relationship, fees, interest rates, probability of
funding, compensating balance and other covenant requirements.
Non-credit card commitments generally have fixed expiration dates, are
variable rate and contain termination and other clauses which provide
for relief from funding in the event that there is a significant
deterioration in the credit quality of the customer. Many loan
commitments are expected to, and typically do, expire without being
drawn upon. Approximately 85% of the Company's commitments to lend
expire within one year. The rates and terms of the Company's
commitments to lend and letters of credit are competitive with others
in the markets in which the Company operates. Carrying amounts which
are comprised of the unamortized fee income and, where necessary,
reserves for any expected credit losses from these financial
instruments, are immaterial.
63
<PAGE>
Item 13. Exhibits, Financial Statement Schedules and Reports of Form 8-K.
(a) Exhibits
(Amended to add previously filed Financial Data Schedule to
'Description of Exhibit' and page numbers added where appropriate)
74
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Certificate of Incorporation of the Company, as amended (1)
3.2 By-laws of the Company, as amended (2)
4.1.1 Rights Agreement dated as of April 12, 1994, between the Company and
The First National Bank of Maryland, as Rights Agent (Right
Certificate attached as Exhibit A to Rights Agreement and Summary of
Rights to Purchase Common Shares attached as Exhibit B to Rights
Agreement) (3)
4.1.2 First Amendment dated April 20, 1995 between the Company and The First
National Bank of Maryland, as Rights Agent (4)
10.1 Subordinated Note Agreement dated February 2, 1988 between The Adams
National Bank and Minbanc Capital Corp. (5)
10.2.1 Non-qualified Stock Option Plan, as amended (6)
10.2.2 Employee Incentive Stock Option Plan and Agreement
10.2.3 Directors Stock Option Plan and Agreement
10.2.4 Non-Qualified Stock Option Agreement
10.3 Employment Agreement dated February 20, 1996 between the Company, the
Bank and Barbara Davis Blum, as amended on March 29, 1996.
10.4 Lease Agreement dated November 1, 1992 between Chase Manhattan Bank,
N.A. as Trustee for Account Number p99904 and The Adams National Bank
(7)
10.5 Lease Agreement dated November 1, 1992 between Chase Manhattan Bank,
N.A. as Trustee for Account Number p99904 and The Adams National Bank
(8)
10.6 Lease Agreement dated April 21, 1988 between Union Station Joint
Venture, Ltd. and The Adams National Bank (9)
10.7.1 Lease Agreement dated April 21, 1989, as amended on August 1, 1989
between Union Station Joint Venture, Ltd. and The Adams National Bank
(10)
10.7.2 Amendment dated December 20, 1993 to Lease Agreement dated April 21,
1989, as amended on August 1, 1989 between Union Station Joint
Venture, Ltd. and The Adams National Bank (11)
75
<PAGE>
10.8 Lease Agreement dated December 20, 1993 between Union Station Joint
Venture, Ltd., and The Adams National Bank (12)
10.9 Sublease Agreement dated September 1, 1981, as amended September 1,
1984, between 2909 M Associates and The Adams National Bank (13)
10.10 Lease Agreement dated March 6, 1996 between 1604 17th Street Limited
Partners and The Adams National Bank.
10.11 Agreement for Information Technology Services between Electronic Data
Systems Corporation and The Adams National Bank (14)
10.12 Special Program Financial Services Agreement dated December 30, 1993
between IBAA Bancard, Inc. and The Adams National Bank (15)
10.13 Deposit Insurance Transfer and Asset Purchase Agreement dated as of
May 1, 1992 by and among the Federal Deposit Insurance Corporation as
Receiver of Metropolitan Bank, N.A., the Federal Deposit Insurance
Corporation and The Adams National Bank (16)
10.14 Asset Pool Proposal Form and the Asset Pool Sale Agreement dated as of
July 6, 1993 by and among the Federal Deposit Insurance Corporation as
Receiver of City National Bank, the Federal Deposit Insurance
Corporation and The Adams National Bank (17)
10.15 Severance Agreement between the Bank and Alexander Beltran dated as of
April 7, 1994 (18)
10.16 Severance Agreement between the Bank and Devin Blum dated as of April
7, 1994 (19)
10.17 Severance Agreement between the Bank and Thomas O. Griel dated as of
April 7, 1994 (20)
10.18 Severance Agreement between the Bank Joyce R. Hertz dated as of April
7, 1994 (21)
10.19 Severance Agreement between the Bank and Kimberly J. Levine dated as
of April 7, 1994 (22)
10.20 Severance Agreement between the Bank and Melrose Nathan dated as of
April 7, 1994 (23)
10.21 Severance Agreement between the Bank and Bijan Partovi dated as of
April 7, 1994 (24)
76
<PAGE>
10.22 Agreement, dated April 20, 1995 between the Company and Marshall T.
Reynolds (25)
21 Subsidiaries of the Registrant (26)
27 Financial Data Schedule for Bank Holding Companies
- ------------------------------
(1) Incorporated by reference to Exhibit 3(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987.
(2) Incorporated by reference to Exhibit 3(b) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987.
(3) Incorporated by reference to Exhibits 1-3 of the Company's
Registration Statement on Form 8- A dated April 12, 1994.
(4) Incorporated by reference to Exhibit 4 to the Company's Registration
Statement on Form 8- A/A dated April 21, 1995.
(5) Incorporated by reference to Exhibit 10(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987.
(6) Incorporated by reference to Exhibit 10(b) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987 and
Exhibit 10(i) of the Company's Annual Report on Form 10-K for fiscal
year ended December 31, 1989.
(7) Incorporated by reference to Exhibit 10(d) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
(8) Incorporated by reference to Exhibit 10(e) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
(9) Incorporated by reference to Exhibit 10(f) of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1988.
(10) Incorporated by reference to Exhibit 10(g) of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989.
(11) Incorporated by reference to Exhibit 10.7.2 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.
(12) Incorporated by reference to Exhibit 10.8 of the Company's Annual
Report on Form 10- K for the fiscal year ended December 31, 1993.
(13) Incorporated by reference to Exhibit 10.9 of the Company's Annual
Report on Form 10- K for the fiscal year ended December 31, 1994.
77
<PAGE>
(14) Incorporated by reference to Exhibit 10(j) of the Company's Annual
Report on Form 10- K for the fiscal year ended December 31, 1992.
(15) Incorporated by reference to Exhibit 10.11 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994.
(16) Incorporated by reference to Exhibit 10 of the Company's Quarterly
Report on Form 10- Q for the quarter ended June 30, 1992.
(17) Incorporated by reference to Exhibit 10 of the Company's Quarterly
Report on Form 10- Q for the quarter ended June 30, 1993.
(18) Incorporated by reference to Exhibit 10.1 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(19) Incorporated by reference to Exhibit 10.2 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(20) Incorporated by reference to Exhibit 10.3 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(21) Incorporated by reference to Exhibit 10.4 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(22) Incorporated by reference to Exhibit 10.5 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(23) Incorporated by reference to Exhibit 10.6 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(24) Incorporated by reference to Exhibit 10.7 of the Company's Current
Report on Form 8- K dated April 27, 1994 (earliest event reported
April 7, 1994).
(25) Incorporated by reference to Exhibit 5 of the Company's Registration
Statement on Form 8-A/A, dated April 21, 1995.
(26) Incorporated by reference to Exhibit 22 of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1987.
(b) No reports on Form 8-K were filed during the last quarter of the
fiscal year ended December 31, 1995.
78
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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: March 29, 1996 By: /s/ Barbara Davis Blum
-----------------------
Barbara Davis Blum
Chairwoman of the Board,
President and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Barbara Davis Blum Chairwoman of the Board, President March 29, 1996
- ---------------------- and Chief Executive Officer
Barbara Davis Blum (Principal Executive Officer)
/s/ Shireen L. Dodson Director March 29, 1996
- ---------------------
Shireen Dodson
/s/ Susan Hager Director March 29, 1996
- ---------------
Susan Hager
- --------------- Director March __, 1996
Jeanne Hubbard
/s/ Clarence L. James, Jr. Director March 29, 1996
- --------------------------
Clarence L. James, Jr.
79
<PAGE>
- -------------------- Director March __, 1996
Marshall T. Reynolds
- --------------- Director March __, 1996
Robert L. Shell, Jr.
/s/ Dana Stebbins Director March 29, 1995
- -----------------
Dana Stebbins
/s/ Susan J. Williams Director March 29, 1996
- ---------------------
Susan J. Williams
/s/ Kimberly J. Levine Senior Vice President, March 29, 1996
- ---------------------- Treasurer and Chief Financial
Kimberly J. Levine Officer (Principal Financial
and Accounting Officer)
80
<PAGE>
EXHIBIT INDEX
Page at Which
Exhibit Appears
Exhibit in Sequentially
Number Description of Exhibit Numbered Copy
- ------ ---------------------- -------------
3.1 Certificate of Incorporation of the Company, as
amended (1)
3.2 By-laws of the Company, as amended (2)
4.1.1 Rights Agreement dated as of April 12, 1994,
between the Company and The First National Bank of
Maryland, as Rights Agent (Right Certificate
attached as Exhibit A to Rights Agreement and
Summary of Rights to Purchase Common Shares
attached as Exhibit B to Rights Agreement) (3)
4.1.2 First Amendment dated April 20, 1995 between the
Company and The First National Bank of Maryland,
as Rights Agent (4)
10.1 Subordinated Note Agreement dated February 2, 1988
between The Adams National Bank and Minbanc
Capital Corp. (5)
10.2.1 Non-qualified Stock Option Plan, as amended (6)
10.2.2 Employee Incentive Stock Option Plan and Agreement 85
10.2.3 Directors Stock Option Plan and Agreement 99
10.2.4 Non-Qualified Stock Option Agreement 113
10.3 Employment Agreement dated February 20, 1996, as
amended on March 29, 1996, between the Company,
the Bank and Barbara Davis Blum 117
10.4 Lease Agreement dated November 1, 1992 between
Chase Manhattan Bank, N.A. as Trustee for Account
Number p99904 and The Adams National Bank (7)
10.5 Lease Agreement dated November 1, 1992 between
Chase Manhattan Bank, N.A. as Trustee for Account
Number p99904 and The Adams National Bank (8)
10.6 Lease Agreement dated April 21, 1988 between Union
Station Joint Venture, Ltd. and The Adams National
Bank (9)
10.7.1 Lease Agreement dated April 21, 1989, as amended
on August 1, 1989 between Union Station Joint
Venture, Ltd. and The Adams National Bank (10)
81
<PAGE>
10.7.2 Amendment dated December 20, 1993 to Lease
Agreement dated April 21, 1989, as amended on
August 1, 1989 between Union Station Joint
Venture, Ltd. and The Adams National Bank (11)
10.8 Lease Agreement dated December 20, 1993 between
Union Station Joint Venture, Ltd., and The Adams
National Bank (12)
10.9 Sublease Agreement dated September 1, 1981, as
amended September 1, 1984, between 2909 M
Associates and The Adams National Bank (13)
10.10 Lease Agreement dated March 6, 1996 between 1604
17th Street Limited Partners and The Adams
National Bank. 125
10.11 Agreement for Information Technology Services
between Electronic Data Systems Corporation and
The Adams National Bank (14)
10.12 Special Program Financial Services Agreement dated
December 30, 1993 between IBAA Bancard, Inc. and
The Adams National Bank (15)
10.13 Deposit Insurance Transfer and Asset Purchase
Agreement dated as of May 1, 1992 by and among the
Federal Deposit Insurance Corporation as Receiver
of Metropolitan Bank, N.A., the Federal Deposit
Insurance Corporation and The Adams National Bank
(16)
10.14 Asset Pool Proposal Form and the Asset Pool Sale
Agreement dated as of July 6, 1993 by and among
the Federal Deposit Insurance Corporation as
Receiver of City National Bank, the Federal
Deposit Insurance Corporation and The Adams
National Bank (17)
10.15 Severance Agreement between the Bank and Alexander
Beltran dated as of April 7, 1994 (18)
10.16 Severance Agreement between the Bank and Devin
Blum dated as of April 7, 1994 (19)
10.17 Severance Agreement between the Bank and Thomas O.
Griel dated as of April 7, 1994 (20)
10.18 Severance Agreement between the Bank Joyce R.
Hertz dated as of April 7, 1994 (21)
10.19 Severance Agreement between the Bank and Kimberly
J. Levine dated as of April 7, 1994 (22)
10.20 Severance Agreement between the Bank and Melrose
Nathan dated as of April 7, 1994 (23)
82
<PAGE>
10.21 Severance Agreement between the Bank and Bijan
Partovi dated as of April 7, 1994 (24)
10.22 Agreement, dated April 20, 1995 between the
Company and Marshall T. Reynolds (25)
21 Subsidiaries of the Registrant (26)
27 Financial Data Schedule for Bank Holding Companies 149
- ------------------------------
(1) Incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
(2) Incorporated by reference to Exhibit 3(b) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
(3) Incorporated by reference to Exhibits 1-3 of the
Company's Registration Statement on Form 8- A
dated April 12, 1994.
(4) Incorporated by reference to Exhibit 4 to the
Company's Registration Statement on Form 8- A/A
dated April 21, 1995.
(5) Incorporated by reference to Exhibit 10(a) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
(6) Incorporated by reference to Exhibit 10(b) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987 and Exhibit
10(i) of the Company's Annual Report on Form 10-K
for fiscal year ended December 31, 1989.
(7) Incorporated by reference to Exhibit 10(d) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
(8) Incorporated by reference to Exhibit 10(e) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
(9) Incorporated by reference to Exhibit 10(f) of the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1988.
(10) Incorporated by reference to Exhibit 10(g) of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989.
(11) Incorporated by reference to Exhibit 10.7.2 of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
(12) Incorporated by reference to Exhibit 10.8 of the
Company's Annual Report on Form 10- K for the
fiscal year ended December 31, 1993.
83
<PAGE>
(13) Incorporated by reference to Exhibit 10.9 of the
Company's Annual Report on Form 10- K for the
fiscal year ended December 31, 1994.
(14) Incorporated by reference to Exhibit 10(j) of the
Company's Annual Report on Form 10- K for the
fiscal year ended December 31, 1992.
(15) Incorporated by reference to Exhibit 10.11 of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994.
(16) Incorporated by reference to Exhibit 10 of the
Company's Quarterly Report on Form 10- Q for the
quarter ended June 30, 1992.
(17) Incorporated by reference to Exhibit 10 of the
Company's Quarterly Report on Form 10- Q for the
quarter ended June 30, 1993.
(18) Incorporated by reference to Exhibit 10.1 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(19) Incorporated by reference to Exhibit 10.2 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(20) Incorporated by reference to Exhibit 10.3 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(21) Incorporated by reference to Exhibit 10.4 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(22) Incorporated by reference to Exhibit 10.5 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(23) Incorporated by reference to Exhibit 10.6 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(24) Incorporated by reference to Exhibit 10.7 of the
Company's Current Report on Form 8- K dated April
27, 1994 (earliest event reported April 7, 1994).
(25) Incorporated by reference to Exhibit 5 of the
Company's Registration Statement on Form 8-A/A,
dated April 21, 1995.
(26) Incorporated by reference to Exhibit 22 of the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987.
84
<PAGE>
In accordance with the Exchange Act, this amended report has been signed
below by the following person(s) on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Kimberly J. Levine Senior Vice President, April 12, 1996
- ---------------------- Treasurer and Chief Financial
Kimberly J. Levine Officer (Principal Financial
and Accounting Officer)
