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, 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 March 31,
1996.
<PAGE>
Page
Part I Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets March 31, 1996
and December 31, 1995 1
Consolidated Statements of Operations for the
three months ended March 31, 1996 and
March 31, 1995 2
Consolidated Statement of Shareholders'
Equity for the three months ended March
31, 1996 3
Consolidated Statements of Cash Flows for the
three months ended March 31, 1996 and
March 31, 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
<PAGE>
Part I Item 1. Financial Statements
BILTMORE BANK CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
(000's Omitted)
March 31, December 31,
1996 1995
CASH AND DUE FROM BANKS $ 6,108 $ 6,337
FEDERAL FUNDS SOLD 3,500 -
-------- --------
TOTAL CASH AND CASH EQUIVALENTS 9,608 6,337
INVESTMENT SECURITIES AVAILABLE FOR SALE 33,372 36,808
LOANS, less allowance for credit losses
of $2,373 and $2,362 at 3/31/96 and 89,414 89,152
12/31/95, respectively
ACCRUED INTEREST RECEIVABLE AND
OTHER ASSETS 1,978 1,936
PREMISES AND EQUIPMENT, net 1,645 1,616
OTHER REAL ESTATE OWNED 103 103
INTANGIBLE ASSETS 1,518 1,563
-------- --------
$137,638 $137,515
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Demand-
Noninterest-bearing $ 26,977 $ 23,985
Interest-bearing 28,097 28,098
Time certificates of deposit,
$100,000 and over 12,069 13,690
Other time certificates and
individual retirement accounts 27,147 30,267
Savings 28,443 20,317
-------- --------
122,733 116,357
ACCRUED INTEREST PAYABLE 152 199
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 141 6,340
OTHER LIABILITIES 816 849
-------- --------
123,842 123,745
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 1,127 930
Net unrealized gain (loss) on securities (9) 162
-------- --------
13,796 13,770
-------- --------
$137,638 $137,515
======== ========
See notes to consolidated financial statements.
1
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31,
1996 1995
---- ----
INTEREST INCOME:
Interest and fees on loans $ 1,956,602 $ 1,953,547
Other interest income 544,041 622,341
----------- -----------
Total interest income 2,500,643 2,575,888
INTEREST EXPENSE 1,041,472 1,062,524
----------- -----------
Net interest income 1,459,171 1,513,364
PROVISION FOR CREDIT LOSSES - -
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES 1,459,171 1,513,364
----------- -----------
CUSTOMER SERVICE FEES 136,117 128,716
GAIN (LOSS) ON SALE OF SECURITIES (4,077) -
INCOME FROM "LINK" BROKERAGE OFFICE 64,357 21,783
TRUST REVENUES 61,333 41,324
----------- -----------
257,730 191,823
----------- -----------
OPERATING EXPENSES:
Salaries and employee benefits, net
of deferred loan origination costs
of $27,400 in 1996 and $25,549 in 1995 769,515 671,489
Occupancy 162,230 150,312
Equipment 77,938 84,632
Data processing 81,602 93,129
Business development 20,602 31,574
Regulatory Fees 13,099 82,764
Management fee expense 108,453 100,782
Supplies and printing 53,807 45,649
Amortization of intangibles 45,814 29,976
Other 85,489 172,751
----------- -----------
1,418,549 1,463,058
----------- -----------
NET INCOME BEFORE INCOME TAX EXPENSE 298,352 242,129
INCOME TAX EXPENSE (102,153) (68,440)
----------- -----------
NET INCOME 196,199 173,689
=========== ===========
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.
2
<PAGE>
BILTMORE BANK CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid-in Accumulated Equity in
Shares Amount Capital Deficit Investments
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 16,522,530 $8,261,265 $4,417,304 $ 930,377 $ 161,732
Net income - - - 196,199 -
Unrealized gain (loss) in
Investments available for
sale as of March 31, 1996 - - - - (170,725)
---------- ---------- ----------- ----------- -----------
BALANCE, March 31, 1996 16,522,530 $8,261,265 $4,417,304 $ 1,126,576 $ (8,993)
========== ========== ========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 196 $ 174
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 98 48
Net amortization and accretion of investment
securities premiums and discounts (2) 6
Net (gain) loss on sale of securities 4 -
Net (gain) loss on sale of fixed assets (5) -
Decrease (increase) in accrued interest receivable
and other assets 47 (412)
(Decrease) increase in accrued interest payable and other
liabilities (74) 89
------- -------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 264 (95)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities 2,289 -
Proceeds from maturities of investment securities 1,000 1,000
Purchase of investment securities (114) (1,013)
Net (increase) in loans (262) 5,347
Purchase of bank premises and equipment (118) (136)
Proceeds on sale of fixed assets 42 -
------- -------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 2,837 5,198
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits and savings 11,117 (3,735)
Net decrease in time certificates of deposit (4,741) 515
Net (decrease) increase in securities sold under agreement
to repurchase (6,206) 865
------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 170 (2,355)
------- -------
NET INCREASE (DECREASED) IN CASH AND CASH EQUIVALENTS 3,271 (7,648)
CASH AND CASH EQUIVALENTS, beginning of year 6,337 13,560
------- --------
CASH AND CASH EQUIVALENTS, end of period $ 9,608 $ 5,912
======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid on deposits. $ 1,041 $ 1,063
</TABLE>
See notes to consolidated financial tatements.
4
<PAGE>
BILTMORE BANK CORP. AND SUBSIDIARY
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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 increased from $137,515,000 at December 31, 1995 to $137,638,000 at
March 31, 1996.
Total deposits increased $6,376,000 over the same period, primarily in the
savings/money fund area.
Other income increased $65,907, primarily due to increased revenue from
brokerage services of $42,574 and an increase in trust fees of $20,000.
Operating expenses decreased $44,509 from the three months ended March 31, 1996,
compared to March 31, 1995. Regulatory fees decreased $69,665 due to the drop in
the FDIC deposit insurance premium. Other expenses decreased $87,262. In 1995,
other expenses included an other loss of $75,000 which is now being recovered on
an installment basis. These decreases are offset in part by a $98,026 increase
in salary and benefits.
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
March 31, 1996 and December 31, 1995, respectively, in the following table:
Total Risk-
Tier 1 Weighted
Capital Capital
------- ----------
Capital Ratio at March 31, 1996 15.26% 16.53%
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 March 31, 1996 and December 31, 1995 were 8.99% 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
On April 25, 1996, Biltmore Bank Corp. held its annual shareholders'
meeting. At that meeting, John L. Heath and Kimberley Gill-Rimsza were
re-elected as directors.
Item 5. Other Information
None
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 LeRoy C. Gust Date May 10, 1996
----------------------------- ------------
LeRoy C. Gust, President and
Chief Executive Officer
BY Date May 10, 1996
------------------------------ ------------
James E. Chappell, Secretary
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
FINANCIAL DATA SCHEDULES
Article 9 of Regulation S-X
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 6,108
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,372
<INVESTMENTS-CARRYING> 33,372
<INVESTMENTS-MARKET> 33,372
<LOANS> 91,787
<ALLOWANCE> 2,373
<TOTAL-ASSETS> 137,638
<DEPOSITS> 122,733
<SHORT-TERM> 293
<LIABILITIES-OTHER> 816
<LONG-TERM> 0
0
0
<COMMON> 8,261
<OTHER-SE> 5,535
<TOTAL-LIABILITIES-AND-EQUITY> 137,638
<INTEREST-LOAN> 1,957
<INTEREST-INVEST> 544
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,501
<INTEREST-DEPOSIT> 1,036
<INTEREST-EXPENSE> 5
<INTEREST-INCOME-NET> 1,459
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (4)
<EXPENSE-OTHER> 1,419
<INCOME-PRETAX> 298
<INCOME-PRE-EXTRAORDINARY> 298
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
<YIELD-ACTUAL> 4.62
<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>
