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 June 30, 1996
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 June 30, 1996.
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
---------------------
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 1
Consolidated Statements of Operations
for the six months ended
June 30, 1996 and June 30, 1995 2
Consolidated Statement of Shareholders'
Equity for the six months ended
June 30, 1996 3
Consolidated Statements of Cash Flows
for the six months ended
June 30, 1996 and June 30, 1995 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
-----------------
Part III Financial Data Schedule 9
-----------------------
Part IV Signatures 11
----------
</TABLE>
<PAGE>
Part I Item 1. Financial Statements
--------------------
BILTMORE BANK CORP.
------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
(000's Omitted)
June 30, December 31,
1996 1995
-------- ------------
CASH AND DUE FROM BANKS $ 6,623 $ 6,337
FEDERAL FUNDS SOLD 5,000 --
--------- ---------
TOTAL CASH AND CASH EQUIVALENTS 11,623 6,337
INVESTMENT SECURITIES AVAILABLE FOR SALE 28,109 36,808
LOANS, less allowance for credit losses
of $2,373 and $2,362 at 6/30/96 and 89,155 89,152
12/31/95, respectively
ACCRUED INTEREST RECEIVABLE AND
OTHER ASSETS 2,060 2,099
PREMISES AND EQUIPMENT, net 1,621 1,616
OTHER REAL ESTATE OWNED 103 103
INTANGIBLE ASSETS 1,338 1,400
--------- ---------
$ 134,009 $ 137,515
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
DEPOSITS:
Demand - Noninterest-bearing $ 26,746 $ 23,985
Time certificates of deposit,
$100,000 and over 9,950 13,690
Other time certificates and
individual retirement accounts 25,571 30,267
Money Market Savings 56,085 48,415
--------- ---------
118,352 116,357
ACCRUED INTEREST PAYABLE 118 199
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 917 6,340
OTHER LIABILITIES 701 849
--------- ---------
120,088 123,745
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 4,417 4,417
Undivided Profits 1,379 930
Net unrealized gain (loss) on securities (136) 162
--------- ---------
13,921 13,770
--------- ---------
$ 134,009 $ 137,515
========= =========
See notes to consolidated financial statements.
1
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
Six months ended June 30,
1996 1995
------------ ------------
INTEREST INCOME:
Interest and fees on loans $ 3,916,394 $ 3,948,007
Other interest income 1,072,762 1,117,447
------------ ------------
Total interest income 4,989,156 5,065,454
INTEREST EXPENSE 2,015,040 2,141,027
------------ ------------
Net interest income 2,974,116 2,924,427
PROVISION FOR CREDIT LOSSES -- --
------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 2,974,116 2,924,427
------------ ------------
CUSTOMER SERVICE FEES 120,509 138,905
LOAN FEES 113,636 134,100
GAIN (LOSS) ON SALE OF SECURITIES (4,077) 28,455
INCOME FROM "LINK" BROKERAGE OFFICE 119,536 47,841
TRUST REVENUES 128,306 87,800
------------ ------------
477,910 437,101
------------ ------------
OPERATING EXPENSES:
Salaries and employee benefits, net
of deferred loan origination costs
of $121,213 in 1996 and $63,213 in 1995 1,430,626 1,256,064
Occupancy 321,528 315,939
Equipment 234,053 179,537
Data processing 166,676 151,022
Management fee expense 216,906 201,564
Other 394,496 796,454
------------ ------------
2,764,285 2,900,580
------------ ------------
NET INCOME BEFORE INCOME TAX EXPENSE 687,741 460,948
INCOME TAX EXPENSE (239,600) (129,378)
------------ ------------
NET INCOME 448,141 331,570
============ ============
NET INCOME PER SHARE $ 0.03 $ 0.02
============ ============
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 16,522,530 16,522,530
============ ============
See notes to consolidated financial statements.
2
<PAGE>
BILTMORE BANK CORP.
-------------------
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
-----------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional
---------------------------- Paid-in Accumulated Equity in
Shares Amount Capital Earnings Investments
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 16,522,530 $8,261,265 $4,417,304 $ 930,377 $ 161,732
Net income -- -- -- 448,141 --
Unrealized gain (loss) in
Investments available for
sale as of June 30, 1996 -- -- -- -- (297,453)
---------- ---------- ---------- ---------- ----------
BALANCE, June 30, 1996 16,522,530 $8,261,265 $4,417,304 $1,378,518 $ (135,721)
========== ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(000's Omitted)
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 448 $ 332
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 176 207
Net amortization and accretion of investment
securities premiums and discounts (18) 98
Net (gain) loss on sale of securities 4 (28)
Net (gain) loss on sale of fixed assets (5) --
Decrease (increase) in accrued interest receivable
and other assets 194 610
(Decrease) increase in accrued interest payable and other
liabilities (222) 123
-------- --------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 577 1,340
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities 2,859 5,141
Proceeds from maturities of investment securities 5,500 2,000
Purchase of investment securities (114) (1,013)
Net (increase) in loans (3) (589)
Purchase of bank premises and equipment (140) (176)
Proceeds on sale of fixed assets 42 --
-------- --------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 8,144 5,363
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits and savings 10,431 (11,475)
Net decrease in time certificates of deposit (8,436) 3,702
Net (decrease) increase in securities sold under agreement
to repurchase (5,430) 175
-------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (3,435) (7,948)
-------- --------
NET INCREASE (DECREASED) IN CASH AND CASH EQUIVALENTS 5,286 (1,245)
CASH AND CASH EQUIVALENTS, beginning of year 6,337 13,560
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 11,623 $ 12,315
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits $ 2,007 $ 2,104
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
----------------------------------
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------
June 30, 1996
-------------
(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 principals 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, 1995. The financial data for the interim periods may not
necessarily be indicative of results to be expected for the year.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Total assets decreased from $137,515,000 at December 31, 1995 to $134,009,000 at
June 30, 1996.
Total deposits increased $1,995,000 over the same period, primarily in the
savings/money fund area.
Net income before taxes for the six month period ending June 30, 1996, increased
$227,000 over the same period in 1995. Net interest income increased $50,000.
Other income increased a total of $41,000 primarily due to increased trust fees
of $41,000 and increased "LINK" brokerage revenue of $71,000 offset by declines
in account service charges, credit card fees, and gain/loss on security sales.
Operating expenses decreased $136,000 due in part to decreased FDIC premiums. In
addition, 1995 other expenses included a $75,000 loss now being recovered on an
installment basis.
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 Risk- Weighted Capital Ratio. The
bank's capital ratios are shown, along with the minimum required ratios as of
June 30, 1996 and December 31, 1995, respectively, in the following table:
Total Risk-
Tier 1 Weighted
Capital Capital
------- -----------
Capital Ratio at June 30, 1996 16.48% 17.75%
Regulatory Capital Requirement 4.00% 8.00%
Capital Ratio at December 31, 1995 13.57% 16.16%
Regulatory Capital Requirement 4.00% 8.00%
6
<PAGE>
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 June 30, 1996 and December 31, 1995 were 9.40% and 8.88%,
respectively.
7
<PAGE>
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
---------------------------------------------------
None
Item 5. Other Information
-----------------
On June 27, 1996, LeRoy C. Gust resigned as Director, President and Chief
Executive Officer of Biltmore Bank Corporation and as Director, Chairman and
Chief Executive Officer of Biltmore Investors Bank.
Mr. Richard A. Hansen was elected as a director and Chairman of Biltmore
Investors Bank.
Mr. Mark C. Behrens was elected as Director and Executive Vice President of
Biltmore Bank Corporation and Director, Executive Vice President, and Chief
Executive Officer of Biltmore Investors Bank.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) None.
(b) None.
8
<PAGE>
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 Mark C. Behrens Date August 8, 1996
----------------------------- ----------------
Mark C. Behrens, Executive
Vice President
BY James E. Chappell Date August 8, 1996
----------------------------- ----------------
James E. Chappell, Secretary
9
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,623
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,109
<INVESTMENTS-CARRYING> 28,109
<INVESTMENTS-MARKET> 28,109
<LOANS> 91,528
<ALLOWANCE> 2,373
<TOTAL-ASSETS> 134,009
<DEPOSITS> 118,352
<SHORT-TERM> 1,035
<LIABILITIES-OTHER> 701
<LONG-TERM> 0
0
0
<COMMON> 8,261
<OTHER-SE> 5,660
<TOTAL-LIABILITIES-AND-EQUITY> 134,009
<INTEREST-LOAN> 3,916
<INTEREST-INVEST> 1,073
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4,989
<INTEREST-DEPOSIT> 2,007
<INTEREST-EXPENSE> 8
<INTEREST-INCOME-NET> 2,974
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (4)
<EXPENSE-OTHER> 2,764
<INCOME-PRETAX> 688
<INCOME-PRE-EXTRAORDINARY> 688
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 448
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<YIELD-ACTUAL> 4.71
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,362
<CHARGE-OFFS> 0
<RECOVERIES> 11
<ALLOWANCE-CLOSE> 2,373
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
