SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended March 31, 1995
Commission file number 2-94245-LA
BILTMORE BANK CORP.
(Exact name of registrant as specified in its charter)
ARIZONA 86-0490147 012112
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2425 East Camelback, Suite 100, Phoenix, Arizona 85016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 381-6800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
16,522,530 shares of common stock are outstanding at March 31, 1995.
<PAGE>
Page
Part I Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 1
Consolidated Statements of Operations
for the three months ended
March 31, 1995 and March 31, 1994 2
Consolidated Statement of Shareholders'
Equity for the three months ended
March 31, 1995 3
Consolidated Statements of Cash Flows
for the three months ended
March 31, 1995 and March 31, 1994 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
Part II Other Information 8
Signatures 9
<PAGE>
Part I Item 1. Financial Statements
BILTMORE BANK CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
(000's Omitted)
March 31, December 31,
1995 1994
---------- -----------
CASH AND DUE FROM BANKS ........................... $ 4,993 $ 7,932
FEDERAL FUNDS SOLD ................................ 919 5,628
---------- ----------
TOTAL CASH AND CASH EQUIVALENTS ................ $ 5,912 $ 13,560
INVESTMENT SECURITIES AVAILABLE FOR SALE .......... 37,212 36,443
Market value of approximately $37,212
at 3/31/95 and $36,443 at 12/31/94
LOANS, less allowance for credit losses
of $2,431 and $2,423 at 3/31/95 and ............. 92,202 56,863
12/31/94, respectively
ACCRUED INTEREST RECEIVABLE AND
OTHER ASSETS .................................... 2,382 2,698
PREMISES AND EQUIPMENT, net ....................... 1,706 1,605
GOODWILL .......................................... 1,646 1,676
---------- ----------
$ 141,060 $ 142,845
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Demand-
Noninterest-bearing ........................... $ 24,220 $ 27,262
Interest-bearing .............................. 38,421 39,968
Time certificates of deposit,
$100,000 and over ............................. 13,831 14,090
Other time certificates and
individual retirement accounts ................ 29,850 29,077
Savings ......................................... 19,686 18,831
---------- ----------
126,008 129,228
ACCRUED INTEREST PAYABLE .......................... 228 219
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE .... 1,468 603
OTHER LIABILITIES ................................. 817 949
---------- ----------
128,521 130,999
SHAREHOLDERS' EQUITY:
Preferred stock, no par value:
Authorized and unissued, 10,000,000 shares .... -- --
Common stock, no par value (stated value $.50)
Authorized, 25,000,000 shares; issued and
outstanding, 16,522,530 shares ................ 8,261 8,261
Additional paid-in capital ...................... 4,415 4,415
Accumulated deficit ............................. 389 215
Equity in Investments ........................... (526) (1,045)
---------- ----------
12,539 11,846
---------- ----------
$ 141,060 $ 142,845
========== ==========
See notes to consolidated financial statements.
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31,
1995 1994
------------- -------------
INTEREST INCOME:
Interest and fees on loans ................. $ 1,953,547 $ 1,342,036
Other interest income ...................... 622,341 531,331
------------- -------------
Total interest income ............. 2,575,888 1,873,367
INTEREST EXPENSE ............................. 1,062,524 817,245
------------- -------------
Net interest income ............... 1,513,364 1,056,122
PROVISION FOR CREDIT LOSSES .................. -- --
------------- -------------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES ................. 1,513,364 1,056,122
------------- -------------
CUSTOMER SERVICE FEES ........................ 128,716 119,837
GAIN ON SALE OF SECURITIES ................... -- 10,715
OTHER INCOME ................................. 63,107 41,591
------------- -------------
191,823 172,143
OPERATING EXPENSES:
Salaries and employee benefits, net
of deferred loan origination costs
of $13,617 and $25,549 ................... 671,489 488,448
Occupancy .................................. 150,312 134,804
Equipment .................................. 84,632 62,161
Data processing ............................ 93,129 73,391
Business development ....................... 31,574 22,567
Real estate owned .......................... -- 1,646
FDIC deposit insurance ..................... 82,764 70,407
Management fee expense ..................... 100,782 59,040
Other ...................................... 248,376 179,638
------------- -------------
1,463,058 1,092,102
NET INCOME BEFORE INCOME TAX EXPENSE AND
EXTRAORDINARY ITEM ......................... 242,129 136,163
INCOME TAX EXPENSE ........................... (68,440) (45,000)
INCOME TAX BENEFIT FROM UTILIZATION OF NET
OPERATING LOSS CARRYFORWARD ................ -- 21,300
------------- -------------
NET INCOME ................................... 173,689 112,463
============= =============
NET INCOME PER SHARE ......................... $ 0.01 $ 0.01
============= =============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING .............. 16,522,530 16,522,530
============= =============
See notes to consolidated financial statements.
<PAGE>
<TABLE>
BILTMORE BANK CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Common Stock Additional
------------------------------ Paid-in Accumulated Equity in
Shares Amount Capital Deficit Investments
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 .......... 16,522,530 $ 8,261,265 $ 4,412,078 $ 215,096 $ --
Net income ....................... -- -- -- 173,689 --
Unrealized gain (loss) in
Investments available for
sale as of March 31, 1995 .......... -- -- -- -- 526,000
----------- ----------- ----------- ----------- -----------
BALANCE, March 31, 1995 ............. 16,522,530 $ 8,261,265 $ 4,412,078 $ 388,785 $ 526,000
=========== =========== =========== =========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
Three months ended March 31,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................. $ 174 $ 112
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization .................. 48 50
Net amortization and accretion of investment
securities premiums and discounts ................ 6 18
Net gains on sale of securities ................... -- (11)
Utilization of preacquisition net operating
loss carryforward ................................ -- 24
(Decrease) increase in accrued interest receivable
and other assets ................................. (412) (114)
Increase in accrued interest payable and other
liabilities ...................................... 89 413
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES .............. (95) 492
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities ...... -- 2,980
Proceeds from maturities of investment securities . 1,000 3,100
Purchase of investment securities ................. (1,013) (6,959)
Acquisition of investments from
American National Bank ("ANB") ................... -- (7,045)
Net decrease (increase) in loans .................. 5,347 1,272
Acquisition of loans from ANB ..................... -- (15,260)
Purchase of bank premises and equipment ........... (136) (11)
Acquisition of bank premises and equipment from ANB -- (1,015)
Increase in goodwill due to acquisition of ANB .... -- (1,392)
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES ................ 5,198 24,330
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits and savings ....... (3,735) 115
Net decrease in time certificates of deposit ...... 515 (2,113)
Acquisition of demand deposits and savings from ANB -- 23,892
Acquisition of certificate of deposits from ANB ... -- 6,930
Net decrease in securities sold under agreement
to repurchase .................................... 865 --
-------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES ....... (2,355) 28,824
-------- --------
NET INCREASE (DECREASED) IN CASH AND CASH EQUIVALENTS .. (7,648) 4,986
CASH AND CASH EQUIVALENTS, beginning of year ........... 13,560 6,753
-------- --------
CASH AND CASH EQUIVALENTS, end of period ............... $ 5,912 $ 11,739
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits ........................ $ 1,063 $ 817
See notes to consolidated financial statements.
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
NOTE 1 -- Basis of Preparation and Presentation
The consolidated financial statements included herein have been prepared
by Biltmore Bank Corp. (the Company), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and include all
adjustments which are, in the opinion of management, necessary for a fair
presentation. The condensed consolidated financial statements include the
accounts of the Company and its subsidiary. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading;
however, it is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto which are incorporated by
reference in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994. The financial data for the interim periods may not
necessarily be indicative of results to be expected for the year.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Total assets increased $1,785,000 from December 31, 1994, to March 31, 1995.
Loans increased by $5,347,000 during the same period. Funding for these loans
came primarily from a reduction in Fed Funds sold and investments. Deposits fell
by $3,220,000 during the same period. The Bank does experience a cyclical drop
in deposits during the first quarter as account balances of corporations and
professional clients tend to drop after year end due to tax payments made.
Income of $173,689 for the first quarter 1995 was $61,226 greater than the same
period in 1994. These 1995 earnings were adversly affected by a $75,000 loss due
to forgery. This matter is currently being litigated and management is
agressively pursuing full recovery along with lost interest and legal fees.
Expenses have increased from last year as the Bank continues to expand its
banking operations. Additional people have been hired and premise expansion at
the Phoenix office is being considered. Management is also looking into ways the
bank may expand its service capabilities through technological enhancements and
expanded marketing efforts.
The Company subsidiary, Biltmore Investors Bank, is required to maintain
adequate capital ratios. The federal banking agencies have adopted a risk-based
capital measurement to assist in the determination of capital adequacy. The
guidelines divide holding companies into two categories: (1) above 150 million
dollars in consolidated assets, in which case the guidelines are applied on a
consolidated basis for all banks under the holding company, and (2) holding
companies below 150 million dollars in consolidated assets level, in which case
the guidelines are applied on a bank-by-bank basis. The Bank falls into the
second category.
These regulations require the Bank to maintain two separate minimum capital
ratios: the Tier 1 Capital Ratio and the Total RiskWeighted Capital Ratio. The
bank's capital ratios are shown, along with the minimum required ratios as of
March 31, 1995 and December 31, 1994, respectively, in the following table:
Total Risk-
Tier 1 Weighted
Capital Capital
------- -----------
Capital Ratio at March 31, 1995 .................. 12.69% 13.95%
Regulatory Capital Requirement ................... 4.00% 8.00%
Capital Ratio at December 31, 1994 ............... 12.96% 14.23%
Regulatory Capital Requirement ................... 4.00% 8.00%
The federal banking agencies have also adopted leverage capital guidelines which
banking organizations must meet. Under these guidelines, the most highly rated
banking organizations must meet a leverage ratio of at least 3% Tier 1 capital
to adjusted total assets, while lower rated banking organizations must maintain
a ratio of at least 4% to 5%. In all cases, banking institutions are expected to
hold capital commensurate with the level and nature of risks. The Bank's
leverage ratios as of March 31, 1995 and December 31, 1994 were 7.32% and 7.73%,
respectively.
Part II
Item 1. Legal Proceedings
There are no material legal proceedings pending against the Company or
its subsidiary, the Bank.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults in Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On April 25, 1995, Biltmore Bank Corp. held its annual shareholders'
meeting. At that meeting, LeRoy C. Gust, Philip B. Bell and L. Robert Peterson
were re-elected as directors.
Gregory B. Dean and H. J. Louis, M.D., resigned from the Board of Directors
effective April 25, 1995, and April 26, 1995, respectively.
Item 5. Other Information
On April 25, 1995, during the regularly scheduled meeting of the Board
of directors, Kimberley Gill-Rimsza was appointed to fill the directors position
vacated by Gregory B. Dean. This term expires in 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Registrant Biltmore Bank Corp.
------------------------------
BY LeRoy C. Gust Date May 10, 1995
----------------------------- -----------------
LeRoy C. Gust, President and
Chief Executive Officer
BY James A. Meyers Date May 10, 1995
----------------------------- ----------------
James A. Meyers, Secretary
and Assistant Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,993
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 919
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,212
<INVESTMENTS-CARRYING> 37,212
<INVESTMENTS-MARKET> 37,212
<LOANS> 94,633
<ALLOWANCE> 2,431
<TOTAL-ASSETS> 141,060
<DEPOSITS> 126,008
<SHORT-TERM> 1,468
<LIABILITIES-OTHER> 1,045
<LONG-TERM> 0
<COMMON> 8,261
0
0
<OTHER-SE> 4,278
<TOTAL-LIABILITIES-AND-EQUITY> 141,060
<INTEREST-LOAN> 1,954
<INTEREST-INVEST> 622
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,576
<INTEREST-DEPOSIT> 1,051
<INTEREST-EXPENSE> 11
<INTEREST-INCOME-NET> 1,514
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,272
<INCOME-PRETAX> 242
<INCOME-PRE-EXTRAORDINARY> 174
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<YIELD-ACTUAL> 4.60
<LOANS-NON> 450
<LOANS-PAST> 4
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 5,429
<ALLOWANCE-OPEN> 2,423
<CHARGE-OFFS> 9
<RECOVERIES> 17
<ALLOWANCE-CLOSE> 2,431
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 124
</TABLE>
