U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB
(Mark
one)
[ X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-16761
Highlands Bankshares, Inc.
(Exact name of small business issuer as specified in its charter)
West Virginia 55-0650793
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
P. O. Box 929, Petersburg, West Virginia 26847
(Address of principal executive offices)
(304) 257-4111
(Issuer's telephone number)
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 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 ....
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at March 31, 1995
Common Stock, par value - $5 514,066 shares
HIGHLANDS BANKSHARES, INC.
INDEX
Page
PART I FINANCIAL INFORMATION 2
Item I Financial Statements
Consolidated Statements of Income - Three Months
Ended March 31, 1995 and 1994 2
Consolidated Balance Sheets - March 31, 1995 and
December 31, 1994 3
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1995 and 1994 4
Consolidated Statements of Changes in Stockholders'
Equity - Three Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Item II Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II OTHER INFORMATION 13-14
SIGNATURE 15
Page 2
Part I Financial Information
Item I Financial Statements
HIGHLANDS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
Three Months Ended
March 31,
1995 1994
Interest Income
Interest and fees on loans $ 2,348 $ 2,273
Interest on federal funds sold 71 30
Interest on time deposits 5 5
Interest and dividends on investment securities
Taxable 495 508
Nontaxable 48 62
Total Interest Income 2,967 2,878
Interest Expense
Interest on time deposits over $100,000 179 156
Interest on other deposits 1,133 1,098
Total Interest Expense 1,312 1,254
Net Interest Income 1,655 1,624
Provision for Loan Losses 30 60
Net Interest Income After
Provision for Loan Losses 1,625 1,564
Noninterest Income
Service charges 48 41
Other 100 76
Loss on security transactions (2) (2)
Total Noninterest Income 146 115
Noninterest Expense
Salaries 400 365
Employee benefits 138 137
Occupancy expense 48 46
Equipment expense 54 53
FDIC insurance 77 76
Data processing 93 85
Other 231 228
Total Noninterest Expense 1,041 990
Income Before Income Taxes 730 689
Income Taxes 242 245
Net Income $ 488 $ 444
Per Share Data
Net Income $ .95 $ .86
Cash Dividends $ .16 $ .14
Weighted Average Common Shares Outstanding 514,066 514,066
The accompanying notes are an integral part of these statements.
Page 3
HIGHLANDS BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
March 31, December 31,
1995 1994
ASSETS
Cash and due from banks $ 3,067 $ 3,327
Federal funds sold 5,729 4,625
Time deposits in other banks 486 384
Securities held to maturity (note 2) 9,211 9,460
Securities available for sale (note 3) 27,140 28,542
Loans, net of unearned interest (note 5) 106,603 104,043
Less allowance for loan losses (note 6) (1,454) (1,454)
Net Loans 105,149 102,589
Construction in progress 1,112 503
Bank premises and equipment 1,302 1,197
Interest receivable 1,290 1,303
Deferred income tax benefits 545 719
Other assets 695 713
Total Assets $ 155,726 $ 153,362
LIABILITIES
Deposits:
Noninterest bearing
Demand deposits $ 13,556 $ 13,357
Interest bearing
Money market and interest checking 13,903 14,504
Money market savings 14,468 14,262
Savings accounts 16,833 18,327
Certificates of deposit over $100,000 13,627 13,233
All other time deposits 64,511 61,881
Total Deposits 136,898 135,564
Accrued expenses and other liabilities 1,349 1,022
Total Liabilities 138,247 136,586
STOCKHOLDERS' EQUITY
Common stock ($5 par value, 1,000,000 shares
authorized, 546,764 shares issued) 2,734 2,734
Surplus 1,662 1,662
Retained earnings 13,929 13,523
Net unrealized loss on securities
available for sale (352) (649)
17,973 17,270
Treasury stock (at cost, 32,698 shares) (494) (494)
Total Stockholders' Equity 17,479 16,776
Total Liabilities and Stockholders' Equity $ 155,726 $ 153,362
The accompanying notes are an integral part of these statements.
Page 4
HIGHLANDS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
Three Months Ended
March 31,
1995 1994
Cash Flows from Operating Activities:
Net income $ 488 $ 444
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss on sale of securities 2 2
Depreciation 39 33
Net amortization 49 58
Provision for loan losses 30 60
Decrease in interest receivable 13 25
Decrease in other assets 18 73
Increase in accrued expenses 327 130
Net Cash Provided by Operating Activities 966 825
Cash Flows from Investing Activities:
Proceeds from maturities of securities
available for sale 3,906 1,298
Proceeds from maturities of securities
held to maturity 244 4,200
Purchase of securities held to maturity (1,039)
Purchase of time deposits in other banks (100)
Purchase of securities available for sale (2,081) (4,028)
Net change in loans to customers (2,590) (236)
Purchase of property and equipment (144) (36)
Net change in federal funds sold (1,104) (1,278)
Construction in progress payments (609)
Net Cash Consumed by Investing Activities (2,478) (1,119)
Cash Flows from Financing Activities:
Net increase (decrease) in deposits 1,334 (140)
Dividends paid in cash (82) (72)
Net Cash Provided (Consumed) by
Financing Activities 1,252 (212)
Net Decrease in Cash and Cash Equivalents (260) (506)
Cash and Cash Equivalents, Beginning of Period 3,327 3,841
Cash and Cash Equivalents, End of Period $ 3,067 $ 3,335
Supplemental Disclosures:
Cash Paid For:
Income taxes $ 47 $ 100
Interest 1,246 1,228
The accompanying notes are an integral part of these statements.
Page 5
HIGHLANDS BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands of Dollars)
Three Months Ended
March 31,
1995 1994
Balance, beginning of period $ 16,776 $ 15,842
Net income for period 488 444
Cash dividends (82) (72)
Cumulative effect of change in accounting for
securities available for sale 122
Change in unrealized gain (loss) on securities
available for sale 297 (130)
Balance, end of period $ 17,479 $ 16,206
The accompanying notes are an integral part of these statements.
Page 6
HIGHLANDS BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 ACCOUNTING PRINCIPLES:
The consolidated financial statements conform to generally
accepted accounting principles and to general industry practices.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial position as of March 31, 1995, and
the results of operations for the three month periods ended March
31, 1995 and 1994. The notes included herein should be read in
conjunction with the notes to financial statements included in
the 1994 annual report to stockholders of Highlands Bankshares,
Inc.
NOTE 2 SECURITIES HELD TO MATURITY:
The amortized cost and fair value of securities held to
maturity as of March 31, 1995 and December 31, 1994, are as
follows:
1995 1994
Amortized Fair Amortized Fair
Cost Value Cost Value
US Treasury securities
and obligations of
US Government
corporations and
agencies $ 5,348 $ 5,310 $ 5,597 $ 5,487
Obligations of states
and political
subdivisions 3,863 3,851 3,863 3,764
Total $ 9,211 $ 9,161 $ 9,460 $ 9,251
NOTE 3 SECURITIES AVAILABLE FOR SALE:
The amortized cost and fair value of securities available for
sale as of March 31, 1995 and December 31, 1994, are as follows:
1995 1994
Amortized Fair Amortized Fair
Cost Value Cost Value
US Treasury securities
and obligations of
US Government
corporations and
agencies $ 25,730 $ 25,357 $ 27,504 $ 26,677
Other 1,968 1,783 2,068 1,865
Total $ 27,698 $ 27,140 $ 29,572 $ 28,542
Page 7
HIGHLANDS BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 LOANS OUTSTANDING:
A summary of loans outstanding as of March 31, 1995 and
December 31, 1994, is as follows:
1995 1994
Commercial $ 19,897 $ 19,462
Real estate - construction 1,437 1,182
- mortgages 62,201 60,783
Consumer installment 25,183 24,728
Total 108,718 106,155
Unearned interest (2,115) (2,112)
Net loans outstanding $ 106,603 $ 104,043
NOTE 5 ALLOWANCE FOR LOAN LOSSES:
A summary of transactions in the allowance for loan losses
for the three months ended March 31, 1995 and 1994, follows:
1995 1994
Balance, beginning of period $ 1,454 $ 1,734
Provisions charged to operating expenses 30 60
Loan recoveries 39 68
Loan charge-offs (69) (38)
Balance, end of period $ 1,454 $ 1,824
Page 8
Item II Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company's net income was $488,000 in the first quarter of 1995, an
increase of 9.91% compared to the first quarter of 1994. Earnings were
$.95 per share for the first quarter of 1995 compared to $.86 per share for
the same quarter in 1994. The Company's annualized return on average
equity was 11.4% in the first quarter of 1995 compared to 11.0% for the
first quarter of 1994, while return on average assets was 1.27% for 1995
and 1.18% for 1994.
The increase in earnings per share for the first quarter of 1995 was
due to an increase in income from the early withdrawal of time deposits, a
decline in the provision for loan losses needed to fund the allowance for
loan losses and improvements in income from insurance activities. Many
bank customers chose to close out low yielding time deposits in favor of
higher yielding time deposits due to more attractive rates offered on
longer term investments. Improvements in the quality of the loan portfolio
were responsible for the lower provision for loan losses. Improved
insurance operations were the result of lower claims on insureds.
Net Interest Income
The Company's net interest income on a tax equivalent basis was 4.55%
($1,680,000) in the first quarter of 1995 compared to 4.53% ($1,656,000) in
the first quarter of 1994. The modest increase was due primarily to
increases in returns of investments and federal funds sold which more than
offset decreases in loan yields and increases in the cost of funds. Real
estate loan yields continued to fall while commercial and consumer loan
yields remained comparable to the same quarter in the prior year. Time
deposit and savings account rates increased due to changes in overall
market rates in the Company's service area. Competition for deposits has
been quite intense on the local level resulting in many programs favorable
to depositors. The interaction of these changes resulted in little change
in the net interest income during the first quarter of 1995.
Loans outstanding at the end of the first quarter of 1995 increased
7.86% from the first quarter of 1994. This loan demand is expected to
continue for the next few quarters as the local economy continues to be
strong. The increase in volume has more than offset decreases in rates and
allowed the Company to maintain a satisfactory level of interest income.
Market rates on deposits began to increase in the second quarter of
1994 as a result of efforts by the Federal Reserve Bank to raise interest
rates. Interest margins have been maintained by higher returns on
investments and federal funds sold. Management believes its liquidity is
adequate to maintain an acceptable net interest margin into the foreseeable
future.
A complete yield analysis is shown as Table I on page 13.
Noninterest Income
Noninterest income increased 26.96% during the first quarter of 1995
compared to the same quarter in 1994. The increase was due to higher
income from insurance operations and greater income from loan servicing
activities. Miscellaneous service charges also increased during the first
quarter of 1995 as compared to the first quarter in 1994.
Page 9
Item II Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Noninterest Expenses
Overall noninterest expenses rose 5.15% for the first quarter of 1995
when compared to the first quarter of 1994. Personnel expenses increased
7.17% in the first quarter of 1995 over the same quarter in 1994. Such
increases reflect merit and inflationary raises and a larger number of full
time equivalent employees. Occupancy, data processing and FDIC insurance
costs increased 5.98% during the first quarter of 1995 as compared to the
same quarter in 1994. Other noninterest expenses and FDIC insurance saw
negligible increases in the first quarter of 1995. The overall increase
was in line with management's expectations.
Loan Portfolio
The Company is an active residential mortgage and construction lender
and generally extends commercial loans to small and medium sized businesses
within its primary service area. The Company's commercial lending activity
extends across its primary service areas of Grant, Hardy and northern
Pendleton counties. Consistent with its focus on providing community-based
financial services, the Company does not attempt to diversify its loan
portfolio geographically by making significant amounts of loans to
borrowers outside of its primary service area.
The principal economic risk associated with each of the categories of
loans in the Company's portfolio is the creditworthiness of its borrowers.
Within each category, such risk is increased or decreased depending on
prevailing economic conditions. The risk associated with the real estate
mortgage loans and installment loans to individuals varies based upon
employment levels, consumer confidence, fluctuations in value of
residential real estate and other conditions that affect the ability of
consumers to repay indebtedness. The risk associated with commercial,
financial and agricultural loans varies based upon the strength and
activity of the local economies of the Company's market areas. The risk
associated with real estate construction loans varies based upon the supply
of and demand for the type of real estate under construction.
Loans increased $2,560,000 or 2.46% in the first quarter in 1995. The
bulk of this increase was in new real estate mortgages and consumer loans.
The loan to deposit ratio was 77.87% at March 31, 1995 compared to 76.75%
at December 31, 1994. Loan demand is expected to remain satisfactory in
the near future.
Asset Quality
Nonperforming loans include nonaccrual loans, loans 90 days or more
past due and restructured loans. Nonaccrual loans are loans on which
interest accruals have been suspended or discontinued permanently.
Restructured loans are loans on which the original interest rate or
repayment terms have been changed due to financial hardship of the
borrower. The loans on nonaccrual status consist of real estate mortgages
and commercial loans. The total of nonaccrual loans as of March 31, 1995
was $116,000 compared to $166,000 at December 31, 1994. Real estate
acquired through foreclosure was $229,000 at March 31, 1995 compared to
$296,000 at December 31, 1994. All foreclosed property held at March 31,
1995 was in the Company's primary service area. The Company's practice is
to value real estate acquired through foreclosure at the lower of (i) an
independent current appraisal or market analysis less anticipated costs of
disposal, or (ii) the existing loan balance. The Company is actively
marketing all foreclosed real estate and does not anticipate material
write-downs in value before disposition.
Page 10
Item II Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Allowance for Loan Losses
Management evaluates the loan portfolio in light of national and local
economic changes, changes in the nature and value of the portfolio and
industry standards. The Company's loan classification system, which rates
existing loans, provides the basis for adjusting the allowance for loan
losses. Management reviews these classification totals, along with
internally generated loan review reports, past due reports, historical loan
loss experience and individual borrower's financial health to determine the
necessary amount to be provided in the allowance for loan losses.
Management evaluates nonperforming loans relative to their collateral value
and makes the appropriate adjustments to the allowance when needed.
Management believes, based on its review, that the Company has an adequate
allowance to absorb any losses in the loan portfolio.
The net amount of charge-offs for the first quarter ended March 31,
1995 was $30,000 which equaled recoveries of $30,000 for the first quarter
of 1994. The 1994 net recoveries figure reflects an abnormally high level
of recoveries that did not recur in the first quarter of 1995. The
allowance for loan losses was $1,454,000 at March 31, 1995 which is
unchanged from the balance at December 31, 1994. The allowance as a
percent of loans outstanding was 1.36% at March 31, 1995 compared to 1.40%
at December 31, 1994. The provision for loan losses for the first quarter
of 1995 was $30,000 compared to $60,000 for the comparable quarter in 1994.
The lower provision was possible due to continued improvement in the
quality of the loan portfolio as evidenced by declines in the volume of
nonaccrual and delinquent loans.
Securities
The Company's securities portfolio serves several purposes. Portions
of the portfolio secure certain public and trust deposits. The remaining
portions are held as investments or used to assist the Company in liquidity
and asset liability management. Total securities at March 31, 1995 were
$36,351,000 compared to $38,002,000 at December 31, 1994. Total securities
as percent of total assets was 23.34% at March 31, 1995 compared to 24.78%
at March 31, 1994. The decrease in securities is a result of good loan
demand, an increase in federal funds sold and the funding of recent
expansions in bank premises.
The securities portfolio consists of two components, securities held
to maturity and securities available for sale. Securities are classified
as held to maturity when management has the intent and the Company has the
ability at the time of purchase to hold the securities to maturity. Held
to maturity securities are carried at cost, adjusted for amortization of
premiums and accretion of discounts. Securities to be held for indefinite
periods of time are classified as available for sale and accounted for at
market value. Securities available for sale include securities that may be
sold in response to changes in market interest rates, changes in the
security's prepayment risk, increases in loan demand, general liquidity
needs and other similar factors. The Company's recent purchases of all
securities have generally been limited to securities of high credit quality
with short to medium term maturities.
With the adoption of Statement of Financial Accounting Standards No.
115 (SFAS No. 115) on January 1, 1994, the Company now segregates those
securities available for sale from those held to maturity. These
securities are valued at their market value with any difference in market
value and amortized cost shown as an adjustment in stockholders' equity.
Changes within the year in market values are reflected as changes in
stockholders' equity, net of the deferred tax effect. As of March 31, 1995
the cost of the securities available for sale exceeded their market value
by $558,000 ($352,000 after tax considerations).
Page 11
Item II Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Deposits
The Company's main source of funds is customer deposits received from
individuals, governmental entities, and businesses located within the
Company's service area. Deposit accounts include demand deposits, savings,
money market and certificates of deposit.
Total deposits increased .98% between December 31, 1994 and March 31,
1995, primarily in the area of time deposit accounts. The cost of funds
for the first quarter of 1995 was 4.26% compared to 4.12% for the same
quarter in 1994. The yields on demand deposits declined slightly within
the period while yields on savings and time deposits increased. The
majority of the Company's deposits are time deposits which are attractive
to persons seeking high yields on their deposits but without the need for
liquidity. The Company has not actively pursued deposits in excess of
$100,000 due to the volatile nature of these relationships.
Capital
The Company seeks to maintain a strong capital base to expand
facilities, promote public confidence, support current operations and grow
at a manageable level. As of March 31, 1995 the Company's total risk based
capital ratio was 19.20% which is far above the regulatory minimum of 8.0%.
The ratio of total capital to total assets was 11.22% at March 31, 1995
which exceeds that of the Company's peers. Earnings have been satisfactory
to allow an increase in dividends in 1995 over those levels experienced in
1994.
Liquidity
Liquidity is the ability to meet present and future financial
obligations through either the sale or maturity of existing assets or the
acquisition of additional funds through liability management. Liquid
assets include cash, interest bearing deposits with banks, federal funds
sold, investments and loans maturing within one year. The Company's
ability to obtain deposits and purchase funds at favorable rates determines
its liability liquidity. As a result of the Company's management of liquid
assets and the ability to generate liquidity through liability funding,
management believes that the Company maintains overall liquidity sufficient
to satisfy its depositors' requirements and meet its customers' credit
needs.
Additional sources of liquidity available to the Company include, but
are not limited to, loan repayments, the ability to obtain deposits through
the adjustment of interest rates and the purchasing of federal funds. To
further meet its liquidity needs, the Company also maintains lines of
credit with correspondent financial institutions and the Federal Reserve
Bank of Richmond. Both subsidiary banks have lines of credit with the
Federal Home Loan Bank of Pittsburgh although neither has utilized such
lines in 1995. In the past, growth in deposits and proceeds from the
maturity of investment securities have been sufficient to fund the net
increase in loans.
Page 12
Item II Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Interest Rate Sensitivity
In conjunction with maintaining a satisfactory level of liquidity,
management must also control the degree of interest rate risk assumed on
the balance sheet. Managing this risk involves regular monitoring of the
interest sensitive assets relative to interest sensitive liabilities over
specific time intervals.
At March 31, 1995 the Company had a negative gap position. This
liability sensitive position typically produces an unfavorable contribution
to earnings during a period of increasing rates. Because the financial
markets were in an increasing rate environment for most of 1994 and into
1995, and the Company had a negative gap position, the Company saw a
smaller than anticipated increase in its net interest margin on a tax
equivalent basis.
With the largest amount of interest sensitive assets and liabilities
repricing within three years, the Company monitors these areas very
closely. Early withdrawal of deposits, prepayments of loans and loan
delinquencies are some of the factors that could affect actual versus
expected cash flows. In addition, changes in rates on interest sensitive
assets and liabilities may not be equal, which could result in a change in
net interest margin. While the Company does not match each of its interest
sensitive assets against specific interest sensitive liabilities, it does
seek to enhance the net interest margin while minimizing exposure to
interest rate fluctuations.
Effects of Inflation
Inflation significantly affects industries having high proportions of
property, plant and equipment or high levels of inventories. Although the
Company is not significantly affected in these areas, inflation does have
an impact on the growth of assets. As assets grow rapidly, it becomes
necessary to increase equity capital at proportionate levels to maintain
the appropriate equity to asset ratios. Traditionally, the Company's
earnings and high capital retention levels have enabled the Company to meet
these needs.
The Company's reported earnings results have been affected by
inflation, but isolating the effect is difficult. The different types of
income and expense are affected in various ways. Interest rates are
affected by inflation, but the timing and magnitude of the changes may not
coincide with changes in the consumer price index. Management actively
monitors interest rate sensitivity, as illustrated by the Gap Analysis
(Table II, page 14) in order to minimize the effects of inflationary trends
on interest rates. Other areas of noninterest expenses may be more
directly affected by inflation.
Page 13
<TABLE>
TABLE 1
Part II Other Information
HIGHLANDS BANKSHARES, INC.
NET INTEREST MARGIN ANALYSIS
(Dollar Amounts in Thousands)
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1995 March 31, 1994
Average Income/ Average Income/
Balance 2 Expense Rates Balance 2 Expense Rates
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans
Commercial $ 19,566 $ 427 8.73% $ 20,885 $ 454 8.70%
Consumer 22,748 613 10.78 21,004 561 10.69
Real estate 61,901 1,308 8.45 56,633 1,258 8.89
Total Loans 104,215 2,348 9.01 98,522 2,273 9.23
Federal funds sold 5,023 71 5.65 3,902 30 3.08
Interest bearing
deposits 388 5 5.15 477 5 4.19
Investments
Taxable 34,448 495 5.75 38,889 508 5.23
Tax exempt 1 3,513 73 8.31 4,363 94 8.62
Total Earning Assets 1 147,587 2,992 8.10 146,153 2,910 7.96
Interest Expense
Demand deposits 30,107 232 3.08 29,554 230 3.11
Savings 17,375 163 3.75 16,498 142 3.44
Time deposits 75,607 917 4.85 75,552 882 4.67
Total Interest
Bearing Liabilities 123,089 1,312 4.26 121,604 1,254 4.12
Net Interest Margin $ 1,680 $ 1,656
Net Yield on Interest Earning Assets 1 4.55% 4.53%
1 Yields are on a taxable equivalent basis.
2 Includes loans and investments in nonaccrual status.
</TABLE>
Page 14
<TABLE>
TABLE II HIGHLANDS BANKSHARES, INC.
INTEREST RATE SENSITIVITY ANALYSIS
MARCH 31, 1995
(In Thousands of Dollars)
<CAPTION>
1 - 90 91 - 365 1 to 3 3 to 5 More than
Days Days Years Years 5 Years Total
<S> <C> <C> <C> <C> <C> <C>
EARNINGS ASSETS
Loans $ 13,938 $ 31,300 $ 48,566 $ 6,338 $ 6,461 $106,603
Fed funds sold 5,729 5,729
Securities and bank
deposits 4,486 6,341 15,576 3,772 6,662 36,837
Total 24,153 37,641 64,142 10,110 13,123 149,169
INTEREST BEARING LIABILITIES
Transaction accounts 13,903 13,903
Money market savings 14,468 14,468
Savings accounts 16,833 16,833
Time deposits less
than $100,000 3,457 4,363 4,580 917 310 13,627
Time deposits more
than $100,000 15,121 27,418 19,216 2,753 3 64,511
Total 63,782 31,781 23,796 3,670 313 123,342
Discrete interest
sensitivity GAP (39,629) 5,860 40,346 6,440 12,810 25,827
Cumulative interest
sensitivity GAP (39,629) (33,769) 6,577 13,017 25,827
Ratio of cumulative interest
sensitive assets to
cumulative interest
sensitive liabilities 37.86% 64.66% 105.51% 110.58% 120.94%
Assumes all transaction, money market and savings deposit accounts reprice within 90 days.
</TABLE>
Page 15
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
HIGHLANDS BANKSHARES, INC.
Leslie A. Barr
President
Clarence E. Porter
Secretary/Treasurer
Date
Page 15
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
HIGHLANDS BANKSHARES, INC.
LESLIE A. BARR
Leslie A. Barr
President
CLARENCE E. PORTER
Clarence E. Porter
Secretary/Treasurer
Date
