<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997 Commission File Number 0-16187
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GRANDBANC, INC.
(Formerly FWB BANCORPORATION)
-----------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 52-1332050
- ------------------------------- ------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1800 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive offices)
(301) 770-1300
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(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
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At April 30, 1997, there were 4,040,915 shares of Common Stock, Par
Value $.10 per share outstanding.
Transitional Small Business Disclosure Format
YES NO X
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<PAGE>
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION PAGE
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Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets................................ 1
Consolidated Statements of Income (Loss)................... 2
Consolidated Statements of Changes in Stockholders' Equity. 3
Consolidated Statements of Changes in Cash Flows........... 4
Notes to Consolidated Financial Statements................. 5
Item 2 - Management's Discussion and Analysis
Financial Condition........................................ 6-9
Results of Operations...................................... 9-11
PART II - OTHER INFORMATION
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Items 1 - 5......................................................... 12
Item 6 - Exhibits and Reports on Form 8-K........................... 12
SIGNATURES.......................................................... 13
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FWB BANCORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
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Unaudited Audited
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,253 $ 2,455
Federal funds sold 4,175 624
Time deposits with banks 3,300 3,300
Investment securities:
Available for sale - at fair value 2,815 3,657
Held to maturity - at amortized cost 13,349 12,821
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Total Investment Securities 16,164 16,478
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Loans 73,884 73,724
Less allowance for loan losses (794) (1,016)
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Loans - net 73,090 72,708
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Bank premises and equipment 1,897 1,823
Foreclosed real estate 1,430 975
Accrued interest receivable 810 618
Intangible assets 1,457 1,479
Other assets 771 665
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TOTAL ASSETS $105,347 $101,125
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LIABILITIES
Non-interest bearing deposits $ 9,404 9,806
Interest bearing deposits 85,263 81,477
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Total deposits 94,667 91,283
Federal funds purchased and other short
borrowings 2,000 2,000
Long-term debt 1,500 1,500
Accrued expenses and other liabilities 473 321
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Total liabilities 98,640 95,104
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STOCKHOLDERS' EQUITY
Common stock - $.10 par value;
7,500,000 shares authorized; shares
outstanding 4,040,915 and 3,925,499,
respectively 404 393
Additional paid-in capital 10,929 10,405
Accumulated deficit (4,453) (4,597)
Net unrealized holding loss on
investment securities (173) (180)
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Total stockholders' equity 6,707 6,021
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $105,347 $101,125
=========== ============
</TABLE>
1
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FWB BANCORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
1997 1996
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<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,721 $772
Interest on investment securities -
U.S. Government, its agencies, and sponsored entities 235 93
Interest on other investment securities 5 --
Interest on time deposits with banks 46 --
Interest on federal funds sold 26 3
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Total interest income 2,033 868
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INTEREST EXPENSE:
Interest on certificates of deposit of $100,000 or more 128 21
Interest on other deposits 813 239
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Total interest expense on deposits 941 260
Interest on short term borrowings 33 25
Interest on long-term debt 44 --
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Total interest expense 1,018 285
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NET INTEREST INCOME 1,015 583
PROVISION FOR LOAN LOSS -- --
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,015 583
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NON-INTEREST INCOME:
Service charges on deposit accounts 82 74
Other income 40 30
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Total non-interest income 122 104
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NON-INTEREST EXPENSE:
Salaries and employee benefits 487 321
Occupancy and equipment expense 218 131
Data processing services 80 63
FDIC insurance 10 3
Insurance 12 16
Legal fees 13 43
Foreclosed real estate expenses 4 6
Other expenses 169 88
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Total non-interest expense 993 671
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INCOME BEFORE INCOME TAXES 144 16
APPLICABLE INCOME TAX -- 1
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NET INCOME $144 $ 15
======= =====
EARNINGS PER COMMON SHARE: $0.04 $0.00
</TABLE>
2
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FWB BANCORPORATION
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Additional Unrealized Total
Common Paid-In Accumulated Holding (Loss) Stockholders'
Stock Capital (Deficit) on Securities Equity
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<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 $ 326 $ 8,476 $ (4,805) $ (257) $ 3,740
Net income for the three months
ended March 31, 1996 -- -- 15 -- 15
Net change in unrealized loss on
investment securities -- -- -- 7 7
----- -------- -------- ------ -------
BALANCE AT MARCH 31, 1996 $ 326 $ 8,476 $ (4,790) $ (250) $ 3,762
===== ======== ======== ====== =======
BALANCE AT DECEMBER 31, 1996 $ 393 $ 10,405 $ (4,597) $ (180) $ 6,021
Net income for the three months
ended March 31, 1997 -- -- 144 -- 144
Issuance of common stock
at $3.00 per share 11 524 -- -- 535
Net change in unrealized loss on
investment securities -- -- -- 7 7
----- -------- -------- ------ -------
BALANCE AT MARCH 31, 1997 $ 404 $ 10,929 $ (4,453) $ (173) $ 6,707
===== ======== ======== ====== =======
</TABLE>
3
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FWB BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 144 $ 15
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 56 26
Accretion and amortization of securities 3 (3)
Amortization of intangibles 22 ---
Net changes in:
Accrued interest receivable (192) (14)
Foreclosed real estate (455) ---
Other assets (106) (1)
Accrued expenses and other liabilities 152 9
Other - net 21 153
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Net cash provided by operating activities (355) 185
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturity of time deposit --- 95
Net increase in federal funds sold (3,551) (486)
Purchases of available for sale securities (177) (327)
Purchases of held to maturity securities (1,600) (500)
Proceeds from maturities/principal
payments on available for sale securities 1,000 ---
Proceeds from maturities/principal
payments on held to maturity securities 1,094 500
Net increase in loans originated (404) (1,759)
Purchases of bank premises and equipment (129) (8)
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Net cash used by investing activities (3,767) (2,485)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 3,385 354
Net increase in federal funds
purchased and other short-term borrowings --- 2,141
Proceeds from issuance of common stock 535 ---
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Net cash provided by financing activities 3,920 2,495
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NET DECREASE IN CASH AND CASH (202) 195
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,455 1,557
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,253 $ 1,752
======== ========
Supplemental disclosures:
Interest payments $ 826 $ 283
Income tax payments --- 1
Noncash investing and financing
activities:
Unrealized gain (loss) on investment
securities available for sale 7 17
</TABLE>
4
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management is responsible for the financial statements, which have been prepared
in accordance with generally accepted accounting principles. The financial
statements contained herein, except for the financial statements as of December
31, 1996, are unaudited. In management's opinion, the financial statements
present fairly the financial condition of the Corporation and its subsidiary at
March 31, 1996 and March 31, 1997, and all adjustments necessary to fairly state
the results of operations and financial condition are reflected and that such
adjustments are of a normal recurring nature. The results of operations
presented for the three months ended March 31, 1997 are not necessarily
indicative of the results of operations to be expected for the remainder of the
year.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management's Discussion and Analysis contains forward-looking statements,
including statements of goals, intentions and exceptions, regarding or based
upon general economic conditions, interest rates, developments in national and
local markets, and other matters, and which, by their nature, are subject to
significant uncertainties.
5
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FINANCIAL CONDITION
FWB Bancorporation's (the "Corporation") total assets at March 31, 1997 of
$105.3 million reflected an increase of $4.2 million or 4.18% from December 31,
1996.
The Corporation's Stockholders' Equity of $6.7 million at March 31, 1997
reflected an increase of $686 thousand or 11.4% from December 31, 1996. The
increase is attributable primarily to earnings from operations of $144 thousand
and the proceeds from the private sale of common stock amounting to $535
thousand.
Total loans of the Corporation's wholly owned financial institution subsidiary,
GrandBank, (the "Bank") at March 31, 1997 of $73.9 million reflected an increase
of $160 thousand from December 31, 1996.
Total deposits of the Bank at March 31, 1997 of $94.7 million reflected an
increase of $3.4 million or 3.7% from December 1996. During the period ended
March 31, 1996, non-interest bearing deposits declined $4.2 million or 4.1%
while interest bearing deposits increased $3.8 million or 4.6%. At March 31,
1997, non-interest bearing deposits are approximately 10% of total deposits.
Liquidity. The Bank's liquidity position, those assets invested in cash,
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federal funds, and obligations of the U.S. Government, its agencies, and
sponsored entities available for sale, totaling $12.5 million, reflected an
increase of $2.5 million or 25% from December 31, 1996. This increase results
primarily from an increase in federal funds
6
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sold of $3.6 million and a decrease in available for sale securities of $842
thousand. Funds available through the Bank's sources of short term borrowing,
asset maturities, and available-for-sale securities are considered adequate to
meet current needs. However, the Bank continues to evaluate the asset and
liability mix to ensure that adequate liquidity is maintained.
The Bank's loan to deposit ratio was 78% at March 31, 1997 compared to 81% at
December 31, 1996.
Investment Activity. The Corporation invests in various types of liquid
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assets, including United States Treasury obligations, securities of federal
government agencies and government sponsored entities, certain certificates of
deposit, federal funds, and other qualifying liquid investments. During the
first quarter of 1997, securities totaling $2 million matured or were called and
securities totaling $1.8 million were acquired.
Allowance for Loan Losses. The allowance for loan losses at March 31, 1997
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was $794 thousand or 1.07% of total loans outstanding, compared to $1 million or
1.38% at December 31, 1996. Charge offs during the quarter ended March 31, 1997
totaled $244 thousand consisting primarily of one foreclosed real estate loan
that was written down by $235 thousand to reflect its estimated fair value at
foreclosure. At March 31, 1997, the allowance for loan losses was 221% of non-
performing loans compared to 79% at December 31, 1996. In management's opinion
the allowance for loan losses as
7
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of March 31, 1997 is adequate to cover potential losses that can be anticipated
at this time based on current risks and knowledge of the portfolio.
Non-performing Loans and Assets. The Bank's non-performing assets totaling
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$2.1 million consist of loans delinquent 90 days or more, non-accrual loans,
restructured loans and other real estate owned ("OREO"). The percentage of non-
performing assets to total assets decreased to 2.03% at March 31, 1997 from
2.24% at December 31, 1996.
Non-performing loans totaled $718 thousand at March 31, 1997 compared to $1.3
million at December 31, 1996. Non-performing loans at March 31, 1997 consist of
loans delinquent 90 days or more totaling $184 thousand, two loans in non-
accrual status in the amount of $176 thousand and one restructured loan in the
amount of $358 thousand. This restructured loan has been renegotiated and is
currently performing within its new terms. The decrease in non-performing loans
resulted primarily from the transfer of one loan in the amount of $742 thousand
from non-accrual to OREO upon foreclosure in the first quarter of 1997 ( see
allowance for loan losses).
At March 31, 1997, OREO was $1.4 million compared to $975 thousand at December
31, 1996. The increase is a result of the foreclosure discussed in the preceding
paragraph. Generally, the Bank evaluates the fair value of each property owned
annually. These evaluations may be appraisals or other market studies. At March
31, 1997, management believes the carrying amounts for OREO properties
approximate fair value.
8
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Stockholders' Equity. Stockholders' equity of $6.7 million at March 31,
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1997 increased $686 thousand from December 31, 1996. The increase results from
earnings of $144 thousand for the quarter and $535 thousand proceeds from the
sale of common stock in private transactions completed in February 1997.
Capital Adequacy and Regulatory Requirements. At March 31, 1997, the
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Bank's ratio of Tier I capital to total average assets equaled 7.09%, which
exceeded the minimum leverage capital ratio of 4% by 3.09%. The Tier I capital
to risk weighted assets ratio was 9.27% which exceeded the minimum required
ratio of 4% by 5.27%. The Bank's total capital to risk-weighted assets ratio at
March 31, 1997 was 10.29% which exceeded the minimum required ratio of 8% by
2.29%.
RESULTS OF OPERATIONS
For the three months ended March 31, 1997, the Corporation had net income of
$144 thousand compared to net income from the corresponding period in 1996 of
$15 thousand, an increase of $129 thousand.
The earnings per share were $0.04 for the three months ended March 31, 1997, but
were negligible for the corresponding period in 1996.
Net Interest Income. Net interest income is the difference between
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interest income on earning assets and interest expense on interest bearing
deposits and borrowings. Net interest income for the three month period ended
March 31, 1997 of $1 million
9
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reflected an increase of $432 thousand or 74% compared to the corresponding
period in 1996. Interest income for the three month period ended March 31, 1997
was $2 million, an increase of $1.2 million or 134% from the same period in
1996. Interest expense of $1 million for the period ended March 31, 1997
reflected an increase $733 thousand or 257%. Each of these increases is due to
increases in the average outstanding balances resulting from the acquisition of
certain assets and liabilities of First Commonwealth Savings Bank of Alexandria
Virginia in September 1996.
The average yield on interest earning assets for the three month period ended
March 31, 1997, was 8.62% compared to 8.90% for the three months ended March 31,
1996. The average cost of funds for the three months ended March 31, 1997, was
4.12% compared to 3.83% for the same period in 1996. Additionally, the net
interest margin was 4.63% for the period ended March 31, 1997 compared to 5.98%
for the corresponding period in 1996. The decline in net interest margin is
primarily the result of a higher cost of funds due to the acquisition previously
described. Deposits acquired were mostly certificates of deposit that pay higher
interest than demand deposits and money market accounts.
Provision for Loan Losses. There was no provision for loan losses in the
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period ended March 31, 1997.
10
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Noninterest Income. Non-interest income for the three month period ended
- ------------------
March 31, 1997, was $122 thousand compared to $104 thousand for the three months
ended March 31, 1996, an increase of $18 thousand or 17%. This increase was
partially the result of increased service charges on deposit accounts due to the
acquisition previously described.
Noninterest Expense. Noninterest expense for the period ended March 31,
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1997 of $993 thousand reflected an increase of $322 thousand or 48% compared to
the corresponding period of 1996. Salaries and benefits increased by $166
thousand or 52%. Occupancy and equipment increased by $87 thousand or 66%. Data
processing services increased by $17 thousand or 27% and other expenses
increased by $81 thousand or 92%. Each of these increases is a direct result of
the acquisition previously described.
Applicable Income Tax. Net operating loss carryforwards for the first
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quarter of 1997 offset current tax expense.
11
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PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS N/A
ITEM 2 - CHANGES IN SECURITIES
(a) N/A
(b) N/A
(c) On February 11, 1997 the Registrant sold 106,666 shares of its common stock
to United Payors & United Providers, Inc. in a private sale. The sales
price was $500,000 and no underwriting discounts or commissions were paid.
The securities were not registered in accordance with the exemption
provided in section 4(2) of the Securities Act of 1933.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES N/A
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS N/A
ITEM 5 - OTHER INFORMATION
Effective in May 1997 the corporation changed its name from FWB
Bancorporation to GrandBanc Inc., by amendment to its charter approved
by shareholders.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
(11) Statement regarding computation of per share earnings.
(27) Financial Data Schedule: Filed herewith.
B. Reports on Form 8-K
None
12
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SIGNATURES
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In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FWB BANCORPORATION
(Registrant)
Date: May 12, 1997 /s/ Steven K. Colliatie
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Steven K. Colliatie
President
Date: May 12, 1997 /s/ David L. Erickson
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David L. Erickson
Chief Financial Officer
13
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Exhibit 11
Statement Regarding Computation of
Earnings per Share
Earnings per share have been computed based upon 3,969,116 shares, the
weighted average number of shares outstanding during the period ended
March 31, 1997.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,253
<INT-BEARING-DEPOSITS> 3,300
<FED-FUNDS-SOLD> 4,175
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,815
<INVESTMENTS-CARRYING> 13,349
<INVESTMENTS-MARKET> 0<F1>
<LOANS> 73,884
<ALLOWANCE> 794
<TOTAL-ASSETS> 105,347
<DEPOSITS> 94,667
<SHORT-TERM> 2,000
<LIABILITIES-OTHER> 473
<LONG-TERM> 1,500
0
0
<COMMON> 404
<OTHER-SE> 6,303
<TOTAL-LIABILITIES-AND-EQUITY> 105,347
<INTEREST-LOAN> 1,721
<INTEREST-INVEST> 240
<INTEREST-OTHER> 72
<INTEREST-TOTAL> 2,033
<INTEREST-DEPOSIT> 941
<INTEREST-EXPENSE> 1,018
<INTEREST-INCOME-NET> 1,015
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 994
<INCOME-PRETAX> 143
<INCOME-PRE-EXTRAORDINARY> 143
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
<YIELD-ACTUAL> 4.63
<LOANS-NON> 175
<LOANS-PAST> 184
<LOANS-TROUBLED> 359
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,016
<CHARGE-OFFS> 244
<RECOVERIES> 22
<ALLOWANCE-CLOSE> 794
<ALLOWANCE-DOMESTIC> 225
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 569<F2>
<FN>
<F1>Not broken out in QSB.
<F2>All unallocated is for domestic loans.
</FN>
</TABLE>
