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 September 30, 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 September 30,
1995.
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Page
Part I Financial Information
---------------------
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of
September 30, 1995 and December 31, 1994 1
Consolidated Statements of Income
for the nine months ended
September 30, 1995 and September 30, 1994 2
Consolidated Statement of Shareholders'
Equity for the nine months ended
September 30, 1995 3
Consolidated Statements of Cash Flows
for the nine months ended
September 30, 1995 and September 30, 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 7-8
-----------------
Part III Signatures 9-10
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<PAGE>
Part I Item 1. Financial Statements
BILTMORE BANK CORP.
------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
(000's Omitted)
September 30, December 31,
1995 1994
---- ----
CASH AND DUE FROM BANKS $ 5,393 $ 7,932
FEDERAL FUNDS SOLD 100 5,628
--------- ---------
TOTAL CASH AND CASH EQUIVALENTS $ 5,493 $ 13,560
INVESTMENT SECURITIES AVAILABLE FOR SALE 43,577 36,443
Market value of approximately $30,572
at 6/30/95 and $36,443 at 12/31/94
LOANS, less allowance for credit losses
of $2,396 and $2,423 at 6/30/95 and 84,056 86,863
12/31/94, respectively
ACCRUED INTEREST RECEIVABLE AND
OTHER ASSETS 2,325 2,698
PREMISES AND EQUIPMENT, net 1,677 1,605
GOODWILL 1,556 1,676
--------- ---------
$ 138,684 $ 142,845
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
DEPOSITS:
Demand-
Noninterest-bearing $ 24,434 $ 27,262
Interest-bearing 30,371 39,968
Time certificates of deposit,
$100,000 and over 14,732 14,090
Other time certificates and
individual retirement accounts 32,377 29,077
Savings 22,075 18,831
--------- ---------
123,989 129,228
ACCRUED INTEREST PAYABLE 239 219
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 485 603
OTHER LIABILITIES 735 949
--------- ---------
125,448 130,999
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
Undivided Profits 686 215
Equity in Investments (126) (1,045)
--------- ---------
13,236 11,846
--------- ---------
$ 138,684 $ 142,845
========= =========
See notes to consolidated financial statements.
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
----------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
Nine months ended September 30,
1995 1994
---- ----
INTEREST INCOME:
Interest and fees on loans $ 5,899,354 $ 4,543,403
Other interest income 1,715,982 1,682,324
------------ ------------
Total interest income 7,615,336 6,225,727
INTEREST EXPENSE 3,293,229 2,471,718
------------ ------------
Net interest income 4,322,107 3,754,009
PROVISION FOR CREDIT LOSSES -- --
------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 4,322,107 3,754,009
CUSTOMER SERVICE FEES 377,465 332,817
FEE INCOME FROM "LINK" BROKERAGE OFFICE 75,655 88,390
TRUST REVENUES 136,301 78,270
NET GAIN ON SALE OF SECURITIES 28,455 10,715
------------ ------------
617,876 510,192
OPERATING EXPENSES:
Salaries and employee benefits, net
of deferred loan origination costs
of $99,305 and $111,678 1,958,604 1,484,914
Occupancy 483,509 435,485
Equipment 264,748 236,668
Data processing 232,888 250,841
Business development-Adv & T&E 170,175 123,265
Real estate owned 53,992 0
FDIC deposit insurance 129,678 263,448
Management fee expense 302,346 196,800
Other 696,817 527,051
------------ ------------
4,292,757 3,518,472
NET INCOME BEFORE INCOME TAX EXPENSE 647,226 745,729
INCOME TAX BENEFIT (EXPENSE) (176,771) 266,827
------------ ------------
NET INCOME 470,455 1,012,556
NET INCOME PER SHARE $ 0.03 $ 0.07
============ ============
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 $ 8,261,000 $ 4,415,000 $ 215,000 $ (1,045,000)
Net income -- -- -- 471,000 --
Change in unrealized gain
(loss) in investments
available for sale through
September 30, 1995 -- -- -- -- 919,000
---------- ------------ ------------ ------------ ------------
BALANCE, September 30, 1995 16,522,530 $ 8,261,000 $ 4,415,000 $ 686,000 $ (126,000)
========== ============ ============ ============ ============
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
BILTMORE BANK CORP. AND SUBSIDIARY
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<CAPTION>
Nine months ended September 30,
(000's omitted)
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 471 $ 1,013
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 134 186
Net amortization and accretion of investment
securities premiums and discounts 56 113
Net gains on sale of securities (28) (11)
Net change in unrealized loss in investment securities 0 0
Net gains on sale of premises and equipment 0 (10)
Amortization of Intangibles 120 0
Decrease (increase) in accrued interest receivable
and other assets (55) (470)
Increase (decrease) in accrued interest payable and other
liabilities (134) 271
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 564 1,092
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities 5,132 2,980
Proceeds from maturities of investment securities 4,000 14,200
Purchase of investment securities (14,901) (16,936)
Acquisition of investments from
American National Bank ("ANB") 0 (7,045)
Net (increase) decrease in loans 2,807 428
Acquisition of loans from ANB 0 (15,260)
Purchase of bank premises and equipment (261) (205)
Proceeds from sales of premises and equipment 8 6
Acquisition of bank premises and equipment from ANB 0 (742)
Increase in goodwill due to acquisition of ANB 0 (1,738)
-------- --------
NET CASH (USED) BY INVESTING ACTIVITIES (3,215) (24,312)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in demand deposits and savings (9,181) (2,867)
Net (decrease) increase in time certificates of deposit 3,942 (2,797)
Acquisition of demand deposits and savings from ANB 0 23,892
Acquisition of certificate of deposits from ANB 0 6,930
Net decrease in securities sold under agreement
to repurchase (177) 0
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES (5,416) 25,158
-------- --------
NET INCREASE (decrease) IN CASH AND CASH EQUIVALENTS (8,067) 1,938
CASH AND CASH EQUIVALENTS, beginning of period 13,560 6,753
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,493 $ 8,691
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits. $ 3,254 $ 2,472
See notes to consolidated financial statements.
</TABLE>
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
----------------------------------
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------
September 30, 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.
NOTE 2 -- Deferred Tax Asset
------------------
During the second quarter of 1994, the Company decided to eliminate the
valuation allowance associated with a deferred tax asset which was created in
prior years by net operating losses. The reason for this elimination of the
valuation allowance was a three year history of increasing profitablility and
the likelihood that the tax loss carryforwards will be utilized. This
determination conforms with the guidelines specified in the Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes".
As a result of this accounting treatment, net income increased by $432,000
during the second quarter of 1994. However, because of the elimination of the
valuation allowance, net income for periods beginning July 1, 1994, will be
subject to income tax expense.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
While total assets at September 30, 1995 were down from totals at December 31,
1994, average assets for September 1995, increased by $11,016,000 from December
1994 averages. Average Loans increased $9,494,000 during the period. Average
deposits increased by $8,952,000. The Bank purchased $14,901,000 in investment
securities and had $9,132,000 in sold and matured securities during the period.
Net income before tax for the nine months ended 1995 was $647,226, compared to
$745,729 for the same period in 1994, Net income after tax was $470,455 or .03 a
share versus .07 a share for the comparable 1994 period. The 1994 results
reflect a tax credit of .04 a share as a result of the elimination of the
valuation allowance related to deferred tax assets (see footnote number 2 -
"deferred Tax Assets".
Net interest margin for the first nine months was 4.43% compared to 3.11% for
the same period in 1994. Non-interest income was $107 thousand higher than the
period in 1994 due to higher trust revenues and customer service fees.
Non-interest expenses were $775 thousand higher than 1994 as the result of
increased staffing to meet an expanding marketplace and as well as higher
management fees and other expenses including training, advertising and
marketing.
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 /s/ LeRoy C. Gust Date September 30, 1995
----------------------------- --------------------
LeRoy C. Gust, President and
Chief Executive Officer
BY /s/ James Chappell Date September 30, 1995
----------------------------- -------------------
James Chappell, Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 5,393
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 43,577
<INVESTMENTS-CARRYING> 43,577
<INVESTMENTS-MARKET> 43,577
<LOANS> 86,468
<ALLOWANCE> 2,412
<TOTAL-ASSETS> 138,684
<DEPOSITS> 123,989
<SHORT-TERM> 485
<LIABILITIES-OTHER> 974
<LONG-TERM> 0
<COMMON> 8,261
0
0
<OTHER-SE> 4,975
<TOTAL-LIABILITIES-AND-EQUITY> 138,684
<INTEREST-LOAN> 5,899
<INTEREST-INVEST> 1,716
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 7,615
<INTEREST-DEPOSIT> 3,254
<INTEREST-EXPENSE> 39
<INTEREST-INCOME-NET> 4,322
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 28
<EXPENSE-OTHER> 4,293
<INCOME-PRETAX> 647
<INCOME-PRE-EXTRAORDINARY> 471
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 471
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<YIELD-ACTUAL> 5.07
<LOANS-NON> 519
<LOANS-PAST> 775
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,374
<ALLOWANCE-OPEN> 2,423
<CHARGE-OFFS> 63
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 2,412
<ALLOWANCE-DOMESTIC> 0
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</TABLE>
